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The Federal Republic of Germany and the Socialist Federal Republic of Yugoslavia have agreed at the signing at Bonn on 26th March 1987 of the Agreement between the Federal Republic of Germany and the Socialist Federal Republic of Yugoslavia for the avoidance of double taxation with respect to taxes on income and on capital upon the following provisions which shall form an integral part of the said Agreement.

(1) With Reference to Articles 11 and 12:

  • (a) Notwithstanding the provisions of these Articles, dividends and interest derived by a resident of Yugoslavia may be taxed in the Federal Republic of Germany, and according to the law of the Federal Republic of Germany:
    • (i) if they are derived from rights or debt-claims carrying a right to participate in profits (including income derived by a sleeping partner from his participation as such, from a "partial loan" and from "profit obligations" within the meaning of the tax law of the Federal Republic of Germany), and
    • (ii) on condition that they are deductible in the determination of profits of the debtor of such income being a resident of the Federal Republic of Germany.
  • (b) Bearing in mind that at the signing of this Agreement interest derived by non-residents is not subject to withholding tax in either of the Contracting States, they will start negotiations on a revision of the provisions of Article 12 of this Agreement concerning taxation at source of interest, if a withholding tax on interest for non-residents is introduced by either of them.

If the Federal Republic of Germany should limit in future in a tax treaty with any other State its taxation at source of dividends to a rate lower than 15 per cent of the gross amount of the dividends, both Contracting States will undertake to review Articles 8 and 11 of the Agreement with a view to providing the same treatment.

(2) With Reference to Article 24:

Where a company which is a resident of the Federal Republic of Germany distributes income derived from sources within Yugoslavia, paragraph (1) shall not preclude the compensatory imposition of corporation tax on such distributions in accordance with the provisions of German tax law.

(3) With Reference to Article 30:

Notwithstanding the provisions of this Article, the provision of paragraph (5) of Article 16 shall apply from the 1st of January 1973.

IN WITNESS WHEREOF, the undersigned, being duly authorised thereto, have signed this Protocol.

DONE at Bonn this 26th day of March 1987 in two originals, each in the German, Serbo-Croatian and English languages, each text being authentic. In the case of divergent interpretation of the German and Serbo-Croatian texts, the English text shall prevail.