ARTICLE 24

Relief from Double Taxation

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

• (a) Unless the provisions of sub-paragraph (b) apply, there shall be excluded from the basis upon which German tax is imposed any item of income arising in Yugoslavia and any item of capital situated within Yugoslavia which, according to this Agreement, may be taxed in Yugoslavia. 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 so excluded.
• (b) Subject to the provisions of German tax law regarding credit for foreign tax, there shall be allowed as a credit against German income and corporation tax payable in respect of the following items of income arising in Yugoslavia the Yugoslav tax paid under the law of Yugoslavia and in accordance with this Agreement on:
  • (i) royalties to which Article 13 applies;
  • (ii) remuneration to which Article 17 applies;
  • (iii) income to which Article 18 applies.
• (c) The provisions of sub-paragraph (a) shall not apply to the profits of, and to the capital represented by movable and immovable property forming part of the business property of, a permanent establishment and to the gains from the alienation of such property, provided that the resident of the Federal Republic of Germany concerned does not prove that the receipts of the permanent establishment or company, both situated in Yugoslavia, are derived exclusively, or almost exclusively, from producing or selling goods or merchandise, giving technical advice or rendering engineering services within Yugoslavia. In such a case, Yugoslav tax payable under the laws of Yugoslavia and in accordance with this Agreement on the above-mentioned items of income and capital shall, subject to the provisions of German tax law regarding credit for foreign tax, be allowed as a credit against German income or corporation tax payable on such items of income or against German capital tax payable on such items of capital.

(2) Tax shall be determined in the case of a resident of Yugoslavia as follows:

• (a) Where a resident of Yugoslavia derives income or owns capital which, in accordance with the provisions of this Agreement, may be taxed in the Federal Republic of Germany Yugoslavia shall, subject to the provisions of sub-paragraphs (b) and (c) of this paragraph, exempt such income or capital from tax.
• (b) Where a resident of Yugoslavia derives income which, in accordance with the provisions of Articles 11, 12 and 13 of the Agreement, may be taxed in the Federal Republic of Germany, Yugoslavia shall allow as a deduction from the tax on the income of that resident an amount equal to the tax paid in the Federal Republic of Germany. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is attributable to such items of income derived from the Federal Republic of Germany.
• (c) Where in accordance with any provision of the Agreement income derived or capital owned by a resident of Yugoslavia is exempt from tax in Yugoslavia, Yugoslavia may in calculating the amount of tax on the remaining income or capital of such resident apply the rate of tax which would have been applicable if the exempted income or capital had not been so exempted.