The Turnbull Government is pleased to announce that instruments of ratification were exchanged between Australia and Germany on Wednesday 7 December 2016, bringing the new Australia-Germany tax treaty into force.
The treaty, which was signed on 12 November 2015, replaces the existing Australia-Germany tax treaty which was signed in 1972.
It modernises the arrangements between Australia and Germany in line with changes to commercial practices, domestic tax systems and recent treaty policies and practices in both countries.
Importantly, the new treaty aligns with recent OECD tax treaty developments, including new provisions recommended by the OECD/G20 that are intended to minimise tax avoidance opportunities and create a more certain business environment for taxpayers.
It will also enhance the exchange of information and assistance in the collection of outstanding tax debts between our tax officials, with these provisions of the new treaty now in effect. This is consistent with both Governments’ support for ongoing OECD and G20 initiatives aimed at improving tax transparency and tax system integrity.
This new treaty is a significant step for Australia, and will further reduce tax barriers to investment and the cost to Australian business of foreign capital and of accessing foreign technology.
Some of the treaty’s new rules will enter into effect as soon as 1 January 2017, including those relating to withholding tax rates on non-resident income; and with respect to certain pensions first paid from 1 January 2017.
The finalisation of the new tax treaty with Germany was a centrepiece recommendation of the Australia‑Germany Advisory Group, co-chaired by Senator the Hon Mathias Cormann.
A copy of the new treaty is available on the Treasury website.