ARTICLE 23

Elimination of Double Taxation

(1) Tax shall be determined in the case of a resident of the Federal Republic of Germany as follows:

• (a) Unless foreign tax credit is to be allowed under sub-paragraph (b), there shall be exempted from the assessment basis of the German tax any item of income arising in the Sultanate of Oman and any item of capital situated within the Sultanate of Oman which, according to this Agreement, may be taxed in the Sultanate of Oman.
• In the case of items of income from dividends the preceding provision shall apply only to such dividends as are paid to a company (not including partnerships) being a resident of the Federal Republic of Germany by a company being a resident of the Sultanate of Oman at least 10 percent of the capital of which is owned directly by the German company and which were not deducted when determining the profits of the company distributing these dividends.
• There shall be exempted from the assessment basis of the taxes on capital any shareholding the dividends of which if paid, would be exempted, according to the foregoing sentences.
• (b) Subject to the provisions of German tax law regarding credit for foreign tax, there shall be allowed as a credit against German tax on income payable in respect of the following items of income the Omani tax paid under the laws of the Sultanate of Oman and in accordance with this Agreement:
  • (i) dividends not dealt with in sub-paragraph (a) including dividends described in sub-paragraph (c) of paragraph 2 of Article 10;
  • (ii) royalties;
  • (iii) directors' fees;
  • (iv) items of income in the meaning of Article 17.
• (c) The provisions of sub-paragraph (b) shall apply instead of the provisions of sub-paragraph (a) to items of income as defined in Articles 7 and 10 and to the assets from which such income is derived if the resident of the Federal Republic of Germany does not prove that the gross income of the permanent establishment in the business year in which the profit has been realised or of the company resident in the Sultanate of Oman in the business year for which the dividends were paid was derived exclusively or almost exclusively from activities within the meaning of numbers 1 to 6 of paragraph 1 of section 8 of the German Law on External Tax Relations (Aussensteuergesetz); the same shall apply to immovable property used by a permanent establishment and to income from this immovable property of the permanent establishment (paragraph 4 of Article 6) and to profits from the alienation of such immovable property (paragraph 1 of Article 13) and of the movable property forming part of the business property of the permanent establishment (paragraph 2 of Article 13).
• (d) The Federal Republic of Germany, however, retains the right to take into account in the determination of its rate of tax the items of income and capital, which are under the provisions of this Agreement exempted from Germany tax.
• (e) Notwithstanding the provisions of sub-paragraph (a) double taxation shall be avoided by allowing a tax credit as laid down in sub-paragraph (b):
  • (i) if in the Contracting States items of income or capital are placed under different provisions of this Agreement or attributed to different persons (except pursuant to Article 9) and this conflict cannot be settled by a procedure in accordance with Article 25, and if as a result of this difference in placement or attribution the relevant income or capital would remain untaxed or be taxed lower than without this conflict; or
  • (ii) if after due consultation with the competent authority of the Sultanate of Oman the Federal Republic of Germany notifies the Sultanate of Oman through diplomatic channels of other items of income to which it intends to apply the provisions of sub-paragraph (b). Double Taxation is then avoided for the notified income by allowing a tax credit from the first day of the calendar year in which the notification was made.

(2) In the Sultanate of Oman double taxation shall be avoided as follows:

• Where a resident of the Sultanate of Oman derives income which, in accordance with the provisions of this Agreement, may be taxed in the Federal Republic of Germany, the Sultanate of Oman shall allow as a deduction from the tax on the income of that resident an amount equal to the income tax paid in the Federal Republic of Germany, whether directly or by deduction. Such deduction shall not, however, exceed that part of the income tax (as computed before the deduction is given) which is attributable to the income which may be taxed in the Federal Republic of Germany.