How will Germany's new tax treaty affect US multinationals?
The Convention will reduce the withholding tax on direct investment dividends, on a reciprocalbasis, from the present 15 percent to 10 percent in 1990 and to the permanent rate of 5 percent in1992. This will be a major benefit to United States multinationals with investments, or plans to invest, inthe Federal Republic of Germany.
How will the German reduction affect the United States?
Thistreatment in the United States will assure that the benefit of the German reduction inures to the UnitedStates shareholders rather than to the United States Treasury. The United States withholding rate onsuch dividend to German investors will remain at 15 percent.
Which items are excluded from the basis upon which German tax is imposed?
Except as provided in subparagraph b), there shall be excluded from the basis uponwhich German tax is imposed any item of income from sources within the United States and anyitem of capital situated within the United States that, according to this Convention, may be taxedin the United States.
When will the US branch tax be imposed on German corporations?
The United States branch tax, prohibited under theexisting convention, will be imposed on United States branches of German corporations for taxableyears beginning on or after January 1, 1991.