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Singapore-Germany Double Tax Treaty

Updated on Thursday 19th May 2016

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Singapore-Germany-double-tax-treatyThe double taxation agreement between Singapore and Germany

Singapore and Germany have signed their first double taxation treaty in 2007. The agreement covers both natural persons and companies residents, respectively registered in one or of both countries. On a broad base, the Singapore-Germany double taxation agreement covers the income tax or elements constituting the income tax, as it follows:

  • -          in Germany the convention applies to the income, corporate, trade and capital gains taxes;
  • -          in Singapore it applies to the income tax.

The agreement also applies to other similar taxes imposed in both contracting states. Our Singapore specialists in company formation can provide you with more information related to the city-state’s taxation system.

Avoidance of double taxation under the Singapore-Germany agreement

The first articles of the Singapore-Germany double taxation convention specify that the agreement is enforced based on tax residency. The agreement establishes that “a resident of a contracting state” refers to any person paying taxes in Singapore or Germany and any company registered or with a place of management in one of the two countries. The treaty also defines permanent establishments as places of management of companies registered in one of the contracting parties carrying out activities in the other state for more than six months.

The avoidance of double taxation in both Singapore and Germany will occur based on exemptions or credits against the taxes paid in the other country. For more information on how the avoidance of double taxation will take place in Singapore, you can refer our local experts.

Reduced rates under the Singapore-Germany double taxation treaty

The Singapore-Germany double tax agreement provisions for the following taxes to benefit from reduced tax rates:

  • -          dividend payments will be subject to a 5% reduced rate on the gross amount of the dividends if the receiving party owns at least 10% of the shares in the company paying the dividends and a15% rate in all other cases;
  • -          interest payments will be subject to a reduced rate of 8% on the gross amount;
  • -          royalties payments will be subject to a reduced rate of 8% on the gross amount.

If you are interested in opening a company in Singapore and need more information about the country’s double tax treaties, do not hesitate to contact our agents.

 

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