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SUBSIDIARY LEGISLATION 123.06
DOUBLE TAXATION RELIEF ON TAXES ON 
INCOME WITH THE FEDERAL REPUBLIC OF 
GERMANY ORDER
6th September, 2002
 LEGAL NOTICE 254 of 2002.
Citation.
Income with the Federal Republic of Germany Order.
Arrangements to 
have effect.
2.  It is hereby declared:-
( a ) that the arrangements specified in the Agreement set
out in the Schedule to this Order have been made with
the Federal Republic of Germany with a view to
affording relief from double taxation in relation to the
following taxes imposed by the laws of the Federal
Republic of Germany:
the income tax Einkommensteuer,
the corporation tax (Korperschaftsteuer),
the capital tax (Vermogensteuer), and
the trade tax (Gewerbesteuer),
including the supplements levied thereon;
( b ) that it is expedient that those arrangements should
have effect;
( c )  that the Agreement has entered into force on the 27th
December, 2001.
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SCHEDULE
AGREEMENT BETWEEN MALTA
AND THE FEDERAL REPUBLIC OF GERMANY
FOR THE AVOIDANCE OF DOUBLE TAXATION WITH
RESPECT TO TAXES ON INCOME AND ON CAPITAL
Malta and the Federal Republic of Germany, desiring to promote their mutual
economic relations by removing fiscal obstacles, have agreed as follows:
Article 1
PERSONAL SCOPE
This Agreement shall apply to persons who are residents of one or both of the
Contracting States.
Article 2
TAXES COVERED
1. This Agreement shall apply to taxes on income and on capital imposed on
behalf of a Contracting State, of a Land or a political subdivision or local authority
thereof, irrespective of the manner in which they are levied.
2. There shall be regarded as taxes on income and on capital all taxes imposed
on total income, on total capital, or on elements of income or of capital, including
taxes on gains from the alienation of movable or immovable property and taxes on
capital appreciation.
3. The existing taxes to which this Agreement shall apply are in particular:
a ) in the Federal Republic of Germany:
the income tax (Einkommensteuer),
the corporation tax (Korperschaftsteuer),
the capital tax (Vermogensteuer), and
the trade tax (Gewerbesteuer),
including the supplements levied thereon
(hereinafter referred to as "German tax");
b ) in the Republic of Malta:
the income tax
(hereinafter referred to as "Malta tax").
4. The Agreement shall apply also to any identical or substantially similar
taxes which are imposed after the date of signature of the Agreement in addition to,
or in place of, the existing taxes. The competent authorities of the Contracting States
shall -if necessary for the application of the Agreement - notify each other of
changes which have been made in their respective taxation laws.
Article 3
GENERAL DEFINITIONS
1. For the purposes of this Agreement, unless the context otherwise requires:
a ) the term "Federal Republic of Germany" means the territory of the
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Federal Republic of Germany, as well as the area of the sea-bed, its sub-
soil and the superjacent water column adjacent to the territorial sea,
insofar as the Federal Republic of Germany exercises there sovereign
rights and jurisdiction in conformity with international law and its
national legislation to explore the continental shelf and exploit its
natural resources;
b ) the term "Malta" means the Republic of Malta and, when used in a
geographical sense, means the Island of Malta, the Island of Gozo and
the other islands of the Maltese archipelago including the territorial
waters thereof, as well as any area of the sea-bed, its sub-soil and the
superjacent water column adjacent to the territorial waters, wherein the
Republic of Malta exercises sovereign rights, jurisdiction, or control in
accordance with international law and its national law, including its
legislation relating to the exploration of the Continental Shelf and
exploitation of its natural resources;
c ) the terms "a Contracting State" and "the other Contracting State" mean
the Federal Republic of Germany or Malta, as the context requires;
d ) the term "person" includes an individual and a company;
e ) the term "company" means any body corporate or any entity which is
treated as a body corporate for tax purposes;
f ) the terms "enterprise of a Contracting State" and "enterprise of the other
Contracting State" mean respectively an enterprise carried on by a
resident of a Contracting State and an enterprise carried on by a resident
of the other Contracting State;
g ) the term "international traffic" means any transport by a ship or aircraft
operated by an enterprise which has its place of effective management
in a Contracting State, except when the ship or aircraft is operated
solely between places in the other Contracting State;
h ) the term "national" means:
aa) in respect of the Federal Republic of Germany, any German
within the meaning of the Basic Law of the Federal Republic of
Germany and any legal person, partnership and association
deriving its status as such from the laws in force in the Federal
Republic of Germany;
bb) in respect of Malta, any individual possessing the nationality of
Malta, and any legal person, partnership or association deriving
its status as such from the laws in force in Malta;
i ) the term "competent authority" means:
aa) in the case of the Federal Republic of Germany, the Federal
Ministry of Finance or the agency to which it has delegated its
powers;
bb) in the case of Malta, the Minister responsible for finance or his
authorised representative.
2. As regards the application of the Agreement by a Contracting State any term
not defined therein shall, unless the context otherwise requires, have the meaning
which it has under the law of that State concerning the taxes to which the Agreement
applies.
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Article 4
RESIDENT
1. For the purposes of this Agreement, the term "resident of a Contracting
State" means any person who, under the laws of that State, is liable to tax therein by
reason of his domicile, residence, place of management or any other criterion of a
similar nature. But this term does not include any person who is liable to tax in that
State in respect only of income from sources in that State or capital situated therein.
2. Where by reason of the provisions of paragraph 1 an individual is a resident
of both Contracting States, then his status shall be determined as follows:
a ) he shall be deemed to be a resident of the State in which he has a
permanent home available to him; if he has a permanent home available
to him in both States, he shall be deemed to be a resident of the State
with which his personal and economic relations are closer (centre of
vital interests);
b ) if the State in which he has his centre of vital interests cannot be
determined, or if he has not a permanent home available to him in either
State, he shall be deemed to be a resident of the State in which he has an
habitual abode;
c ) if he has an habitual abode in both States or in neither of them, he shall
be deemed to be a resident of the State of which he is a national;
d ) if he is a national of both States or of neither of them, the competent
authorities of the Contracting States shall settle the question by mutual
agreement.
3. Where by reason of the provisions of paragraph 1 a company is a resident of
both Contracting States, then it shall be deemed to be a resident of the State in which
its place of effective management is situated.
Article 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Agreement, the term "permanent establishment"
means a fixed place of business through which the business of an enterprise is
wholly or partly carried on.
2. The term "permanent establishment" includes especially:
a ) a place of management;
b ) a branch;
c ) an office;
d ) a factory;
e ) a workshop, and
f ) a mine, an oil or gas well, a quarry or any other place of extraction of
natural resources including an offshore drilling site.
3. A building site or construction or installation project constitutes a
permanent establishment only if it lasts more than nine months.
4. Notwithstanding the preceding provisions of this Article, the term
"permanent establishment" shall be deemed not to include:
a ) the use of facilities solely for the purpose of storage, display or delivery
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of goods or merchandise belonging to the enterprise;
b ) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of storage, display or delivery;
c ) the maintenance of a stock of goods or merchandise belonging to the
enterprise solely for the purpose of processing by another enterprise;
d ) the maintenance of a fixed place of business solely for the purpose of
purchasing goods or merchandise or of collecting information, for the
enterprise;
e ) the maintenance of a fixed place of business solely for the purpose of
carrying on, for the enterprise, any other activity of a preparatory or
auxiliary character;
f ) the maintenance of a fixed place of business solely for any combination
of activities mentioned in sub-paragraphs  a ) to  e ), provided that the
overall activity of the fixed place of business resulting from this
combination is of a preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2, where a person -
other than an agent of an independent status to whom paragraph 6 applies - is acting
on behalf of an enterprise and has, and habitually exercises, in a Contracting State an
authority to conclude contracts in the name of the enterprise, that enterprise shall be
deemed to have a permanent establishment in that State in respect of any activities
which that person undertakes for the enterprise, unless the activities of such person
are limited to those mentioned in paragraph 4 which, if exercised through a fixed
place of business, would not make this fixed place of business a permanent
establishment under the provisions of that paragraph.
6. An enterprise shall not be deemed to have a permanent establishment in a
Contracting State merely because it carries on business in that State through a
broker, general commission agent or any other agent of an independent status,
provided that such persons are acting in the ordinary course of their business.
7. The fact that a company which is a resident of a Contracting State controls
or is controlled by a company which is a resident of the other Contracting State or
which carries on business in that other State (whether through a permanent
establishment or otherwise), shall not of itself constitute either company a
permanent establishment of the other.
Article 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from immovable
property (including income from agriculture or forestry) situated in the other
Contracting State may be taxed in that other State.
2. The term "immovable property" shall have the meaning which it has under
the law of the Contracting State in which the property in question is situated. The
term shall in any case include property accessory to immovable property, livestock,
equipment and other business assets used in agriculture and forestry, rights to which
the provisions of general law respecting landed property apply, usufruct of
immovable property and rights to variable or fixed payments as consideration for the
working of, or the right to work, or to explore for, mineral deposits, sources and
other natural resources; ships, boats and aircraft shall not be regarded as immovable
property.
3. The provisions of paragraph 1 shall apply to income derived from the direct
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use, letting, or use in any other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to the income from
immovable property of an enterprise and to income from immovable property used
for the performance of independent personal services.
Article 7
BUSINESS PROFITS
1. The profits of an enterprise of a Contracting State shall be taxable only in
that State unless the enterprise carries on business in the other Contracting State
through a permanent establishment situated therein. If the enterprise carries on
business as aforesaid, the profits of the enterprise may be taxed in the other State but
only so much of them as is attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an enterprise of a
Contracting State carries on business in the other Contracting State through a
permanent establishment situated therein, there shall in each Contracting State be
attributed to that permanent establishment the profits which it might be expected to
make if it were a distinct and separate enterprise engaged in the same or similar
activities under the same or similar conditions and dealing wholly independently
with the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment, there shall be
allowed as deductions expenses which are incurred for the purposes of the
permanent establishment, including executive and general administrative expenses
so incurred, whether in the State in which the permanent establishment is situated or
elsewhere.
4. Insofar as it has been customary in a Contracting State to determine the
profits to be attributed to a permanent establishment on the basis of an
apportionment of the total profits of the enterprise to its various parts, nothing in
paragraph 2 shall preclude that Contracting State from determining the profits to be
taxed by such an apportionment as may be customary; the method of apportionment
adopted shall, however, be such that the result shall be in accordance with the
principles contained in this Article.
5. No profits shall be attributed to a permanent establishment by reason of the
mere purchase by that permanent establishment of goods or merchandise for the
enterprise.
6. For the purposes of the preceding paragraphs, the profits to be attributed to
the permanent establishment shall be determined by the same method year by year
unless there is good and sufficient reason to the contrary.
7. Where profits include items of income which are dealt with separately in
other Articles of this Agreement, then the provisions of those Articles shall not be
affected by the provisions of this Article.
Article 8
SHIPPING AND AIR TRANSPORT
1. Profits from the operation of ships or aircraft in international traffic shall be
taxable only in the Contracting State in which the place of effective management of
the enterprise is situated.
2. For the purposes of this Article the term "profits from the operation of ships
or aircraft in international traffic" shall include profits from:
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a ) the occasional chartering of ships or aircraft, and
b ) the use or hiring out of containers (including trailers and ancillary
equipment used for transporting the containers),
if these activities pertain to the operation of ships or aircraft in international traffic.
3. If the place of effective management of a shipping enterprise is aboard a
ship, then it shall be deemed to be situated in the Contracting State in which the
home harbour of the ship is situated, or, if there is no such home harbour, in the
Contracting State of which the operator of the ship is a resident.
4. The provisions of paragraph 1 shall also apply to profits from the
participation in a pool, a joint business or an international operating agency.
Article 9
ASSOCIATED ENTERPRISES
1. Where
a ) an enterprise of a Contracting State participates directly or indirectly in
the management, control or capital of an enterprise of the other
Contracting State, or
b ) the same persons participate directly or indirectly in the management,
control or capital of an enterprise of a Contracting State and an
enterprise of the other Contracting State, 
and in either case conditions are made or imposed between the two enterprises in
their commercial or financial relations which differ from those which would be made
between independent enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by reason of those conditions,
have not so accrued, may be included in the profits of that enterprise and taxed
accordingly.
2. Where a Contracting State includes in the profits of an enterprise of that
State - and taxes accordingly - profits on which an enterprise of the other
Contracting State has been charged to tax in that other State and the profits so
included are profits which would have accrued to the enterprise of the first-
mentioned State if the conditions made between the two enterprises had been those
which would have been made between independent enterprises, then that other State
shall make an appropriate adjustment to the amount of the tax charged therein on
those profits. In determining such adjustment, due regard shall be had to the other
provisions of this Agreement and the competent authorities of the Contracting States
shall if necessary consult each other.
Article 10
DIVIDENDS
1. Dividends paid by a company which is a resident of a Contracting State to a
resident of the other Contracting State may be taxed in that other State.
2. However, such dividends may also be taxed in the Contracting State of
which the company paying the dividends is a resident and according to the laws of
that State, but if the beneficial owner of the dividends is a resident of the other
Contracting State the tax so charged shall not exceed:
a ) 5 per cent of the gross amount of the dividends if the beneficial owner is
a company (other than a partnership) which holds directly at least 10 per
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cent of the capital of the company paying the dividends;
b ) 15 per cent of the gross amount of the dividends in all other cases.
3. In the case of Malta, the provisions of paragraph 2 shall not apply as long as
according to the Malta tax law the tax chargeable on the profits of a company may be
offset against the shareholder’s income tax. In such case the Malta tax on the gross
amount of the dividends paid by a company which is a resident of Malta to a resident
of the Federal Republic of Germany who is the beneficial owner thereof shall not
exceed:
a ) that tax which is chargeable on the profits out of which the dividends
are paid; or
b ) 15 per cent on the profits out of which the dividends are paid, if the
dividends are paid out of gains or profits earned in any year in respect
of which the company is in receipt of any benefit under the provisions
regulating aids to industries in Malta, and the shareholder submits
returns and accounts to the taxation authorities of Malta in respect of his
income liable to Malta tax for the relative year of assessment.
4. The term "dividends" as used in this Article means income from shares,
"jouissance" shares or "jouissance" rights, mining shares, founders’ shares or other
income which is subjected to the same taxation treatment as income from shares by
the laws of the State of which the company making the distribution is a resident. The
term "dividends" includes also income derived by a sleeping partner ("stiller
Gesellschafter") from his participation as such or from a "partiarisches Darlehen",
"Gewinnobligationen" or similar payments and distributions on certificates of an
investment fund or investment trust.
5. The provisions of paragraphs 1 to 3 shall not apply if the beneficial owner of
the dividends, being a resident of a Contracting State, carries on business in the other
Contracting State of which the company paying the dividends is a resident, through a
permanent establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the holding in respect of
which the dividends are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article 14, as
the case may be, shall apply.
6. Where a company which is a resident of a Contracting State derives profits
or income from the other Contracting State, that other State may not impose any tax
on the dividends paid by the company, except insofar as such dividends are paid to a
resident of that other State or insofar as the holding in respect of which the dividends
are paid is effectively connected with a permanent establishment or a fixed base
situated in that other State, nor subject the company’s undistributed profits to a tax
on the company’s undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income arising in such
other State.
Article 11
INTEREST
1. Interest arising in a Contracting State and paid to a resident of the other
Contracting State shall be taxable only in that other State if such resident is the
beneficial owner of the interest.
2. The term "interest" as used in this Article means income from debt-claims of
every kind, whether or not secured by mortgage, and in particular, income from
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government securities and income from bonds or debentures, including premiums
and prizes attaching to such securities, bonds or debentures. Penalty charges for late
payment shall not be regarded as interest for the purpose of this Article.
3. The provisions of paragraph 1 shall not apply if the beneficial owner of the
interest, being a resident of a Contracting State, carries on business in the other
Contracting State in which the interest arises, through a permanent establishment
situated therein, or performs in that other State independent personal services from a
fixed base situated therein, and the debt-claim in respect of which the interest is paid
is effectively connected with such permanent establishment or fixed base. In such
case the provisions of Article 7 or Article 14, as the case may be, shall apply.
4. Where, by reason of a special relationship between the payer and the
beneficial owner or between both of them and some other person, the amount of the
interest, having regard to the debt-claim for which it is paid, exceeds the amount
which would have been agreed upon by the payer and the beneficial owner in the
absence of such relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the payments shall remain
taxable according to the laws of each Contracting State, due regard being had to the
other provisions of this Agreement.
Article 12
ROYALTIES
1. Royalties arising in a Contracting State and paid to a resident of the other
Contracting State shall be taxable only in that other State if such resident is the
beneficial owner of the royalties.
2. The term "royalties" as used in this Article means payments of any kind
received as a consideration for the use of, or the right to use, any copyright of
literary, artistic or scientific work including cinematograph films, any patent, trade
mark, design or model, plan, secret formula or process, or for information
concerning industrial, commercial or scientific experience.
3. The provisions of paragraph 1 shall not apply if the beneficial owner of the
royalties, being a resident of a Contracting State, carries on business in the other
Contracting State in which the royalties arise, through a permanent establishment
situated therein, or performs in that other State independent personal services from a
fixed base situated therein, and the right or property in respect of which the royalties
are paid is effectively connected with such permanent establishment or fixed base. In
such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
4. Where, by reason of a special relationship between the payer and the
beneficial owner or between both of them and some other person, the amount of the
royalties, having regard to the use, right or information for which they are paid,
exceeds the amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the laws of each Contracting State, due
regard being had to the other provisions of this Agreement.
Article 13
CAPITAL GAINS
1. Gains derived by a resident of a Contracting State from the alienation of
immovable property situated in the other Contracting State may be taxed in that
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other State.
2. Gains from the alienation of shares and similar rights in a company, the
assets of which consist principally of immovable property situated in a Contracting
State may be taxed in that State.
3. Gains from the alienation of movable property forming part of the business
property of a permanent establishment which an enterprise of a Contracting State has
in the other Contracting State or of movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State for the
purpose of performing independent personal services, including such gains from the
alienation of such a permanent establishment (alone or with the whole enterprise) or
of such fixed base, may be taxed in that other State.
4. Gains from the alienation of ships or aircraft operated in international traffic
or movable property pertaining to the operation of such ships or aircraft, shall be
taxable only in the Contracting State in which the place of effective management of
the enterprise is situated.
5. Gains from the alienation of any property other than that referred to in
paragraphs 1 to 4 shall be taxable only in the Contracting State of which the
alienator is a resident.
Article 14
INDEPENDENT PERSONAL SERVICES
1. Income derived by a resident of a Contracting State in respect of
professional services or other activities of an independent character shall be taxable
only in that State unless he has a fixed base regularly available to him in the other
Contracting State for the purpose of performing his activities or he is present in the
other Contracting State for a period or periods amounting to or exceeding in the
aggregate 183 days in any twelve-month period commencing or ending in the fiscal
year concerned. If he has such a fixed base or remains in that other State for the
aforesaid period or periods the income may be taxed in that other State but only so
much of it as is attributable to that fixed base or is derived in that other State during
the aforesaid period or periods.
2. The term "professional services" includes especially independent scientific,
literary, artistic, educational or teaching activities as well as the independent
activities of physicians, dentists, lawyers, engineers, architects and accountants.
Article 15
DEPENDENT PERSONAL SERVICES
1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other
similar remuneration derived by a resident of a Contracting State in respect of an
employment shall be taxable only in that State unless the employment is exercised in
the other Contracting State. If the employment is so exercised, such remuneration as
is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a
resident of a Contracting State in respect of an employment exercised in the other
Contracting State shall be taxable only in the first-mentioned State if:
a) the recipient is present in the other State for a period or periods not
exceeding in the aggregate 183 days in any twelve-month period
commencing or ending in the fiscal year concerned, and
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b) the remuneration is paid by, or on behalf of, an employer who is not a
resident of the other State, and
c) the remuneration is not borne by a permanent establishment or a fixed
base which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article, remuneration
derived in respect of an employment exercised aboard a ship or aircraft operated in
international traffic may be taxed in the Contracting State in which the place of
effective management of the enterprise which operates the ship or aircraft is situated.
Article 16
DIRECTORS’ FEES
Directors’ fees and other similar payments derived by a resident of a Contracting
State in his capacity as a member of the board of directors of a company which is a
resident of the other Contracting State may be taxed in that other State.
Article 17
ARTISTES AND SPORTSMEN
1. Notwithstanding the provisions of Articles 7, 14 and 15, income derived by
a resident of a Contracting State as an entertainer, such as a theatre, motion picture,
radio or television artiste, or a musician, or as a sportsman, from his personal
activities as such exercised in the other Contracting State, may be taxed in that other
State.
2. Notwithstanding the provisions of Article 12, the income derived by the
persons mentioned in paragraph 1 from their personal activities exercised in the
other Contracting State shall also include remuneration of any kind paid for the use
or the right to use the name, the picture or other personal rights of such persons. The
same applies to income derived from the toleration of the recording and transmission
of artistic and athletic performances by radio and television.
3. Where income as defined in paragraphs 1 and 2 accrues not to the entertainer
or sportsman himself but to another person, that income may, notwithstanding the
provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the
activities of the entertainer or sportsman are exercised.
4. Paragraphs 1 and 3 shall not apply to income accruing from the exercise of
activities by artistes or sportsmen in a Contracting State where the visit to that State
is financed entirely or mainly from public funds of the other State, a Land, a political
subdivision or a local authority thereof or by an organisation which in that other
State is recognised as a charitable organisation. In such a case the income may be
taxed only in the Contracting State of which the individual is a resident.
Article 18
PENSIONS, ANNUITIES AND SIMILAR PAYMENTS
1. Pensions and similar payments or annuities paid to a resident of a
Contracting State from the other Contracting State shall be taxable only in the first-
mentioned State.
2. Notwithstanding the provisions of paragraph 1, payments received by an
individual being a resident of a Contracting State from the statutory social insurance
of the other Contracting State shall be taxable only in that other State.
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3. Notwithstanding the provisions of paragraph 1, recurrent or non-recurrent
payments made by one of the Contracting States or a political subdivision thereof to
a person resident in the other Contracting State for damages sustained as a result of
war or political persecution or of military or civil service (including restitution
payments) shall be taxable only in the first-mentioned State.
4. The term "annuities" means certain amounts payable periodically at stated
times, for life or for a specified or ascertainable period of time, under an obligation
to make the payments in return for adequate and full consideration in money or
money’s worth.
5. Maintenance payments, including those for children, made by a resident of a
Contracting State to a resident of the other Contracting State shall be exempted from
tax in that other State. This shall not apply where such maintenance payments are
deductible in the first-mentioned State in computing the taxable income of the payer;
tax allowances in mitigation of social burdens are not deemed to be deductions for
the purposes of this paragraph.
Article 19
GOVERNMENT SERVICE
1. Remunerations, other than pensions, paid by a Contracting State, a Land, a
political subdivision or a local authority thereof or some other legal entity under
public law of that State to an individual in respect of services rendered to that State,
a Land, a political subdivision or a local authority thereof or some other legal entity
under public law shall be taxable only in that State. However, such remuneration
shall be taxable only in the other Contracting State if the services are rendered in
that State and if the individual is a resident of that State and
a ) is a national of that State; or
b ) did not become a resident of that State solely for the purpose of
rendering the services.
2. Notwithstanding the provisions of Article 18, pensions paid by a
Contracting State, a Land, a political subdivision or a local authority thereof or some
other legal entity under public law of that State to an individual in respect of services
rendered to that State, a Land, a political subdivision or a local authority thereof or
some other legal entity under public law shall be taxable only in the other
Contracting State if the individual is a resident of that State and a national of that
State.
3. The provisions of Articles 15,16 and 18 shall apply to remuneration and
pensions in respect of services rendered in connection with a business carried on by
a Contracting State, a Land, a political subdivision or a local authority thereof or
some other legal entity under public law of that State.
4. The provisions of paragraph 1 shall likewise apply in respect of
remuneration paid, under a development assistance programme of a Contracting
State, a Land, a political subdivision or a local authority thereof, out of funds
exclusively supplied by that State, Land, political subdivision or local authority, to a
specialist or volunteer seconded to the other Contracting State with the consent of
that other State.
5. The provisions of paragraph 1 shall likewise apply in respect of
remuneration paid by or for the Goethe Institute of the Federal Republic of
Germany. Corresponding treatment of the remuneration of other comparable
institutions of the Contracting States may be arranged by the competent authorities
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE FEDERAL REPUBLIC OF GERMANY _g S.L.123.06 13
by mutual agreement. If such remuneration is not taxed in the State where the
institution was founded, the provisions of Article 15 shall apply.
Article 20
VISITING PROFESSORS, TEACHERS AND STUDENTS
1. An individual who visits a Contracting State at the invitation of that State or
of a university, college, school, museum or other cultural institution of that State or
under an official programme of cultural exchange for a period not exceeding two
years solely for the purpose of teaching, giving lectures or carrying out research at
such institution and who is, or was immediately before that visit, a resident of the
other Contracting State shall be exempt from tax in the first-mentioned State on his
remuneration for such activity, provided that such remuneration is derived by him
from outside that State.
2. Payments which a student or business apprentice who is or was immediately
before visiting a Contracting State a resident of the other Contracting State and who
is present in the first-mentioned State solely for the purpose of his education or
training receives for the purpose of his maintenance, education or training shall not
be taxed in that State, provided that such payments arise from sources outside that
State.
Article 21
OTHER INCOME 
1. Items of income of a resident of a Contracting State, wherever arising, not
dealt with in the foregoing Articles of this Agreement shall be taxable only in that
State.
2. The provisions of paragraph 1 shall not apply to income, other than income
from immovable property, if the recipient of such income, being a resident of a
Contracting State, carries on business in the other Contracting State through a
permanent establishment situated therein, or performs in that other State independent
personal services from a fixed base situated therein, and the right or property in
respect of which the income is paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article 7 or Article 14, as
the case may be, shall apply.
Article 22
CAPITAL
1. Capital represented by immovable property, owned by a resident of a
Contracting State and situated in the other Contracting State, may be taxed in that
other State.
2. Capital represented by movable property forming part of the business
property of a permanent establishment which an enterprise of a Contracting State has
in the other Contracting State or by movable property pertaining to a fixed base
available to a resident of a Contracting State in the other Contracting State for the
purpose of performing independent personal services, may be taxed in that other
State.
3. Capital represented by ships and aircraft operated in international traffic and
by movable property pertaining to the operation of such ships and aircraft shall be
taxable only in the Contracting State in which the place of effective management of
the enterprise is situated.
14 _g S.L.123.06
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE FEDERAL REPUBLIC OF GERMANY
4. All other elements of capital of a resident of a Contracting State shall be
taxable only in that State.
Article 23
AVOIDANCE OF DOUBLE TAXATION IN THE STATE OF RESIDENCE
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 Malta and any item of capital situated within Malta
which, according to this Agreement, may be taxed in Malta. 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
exempted. 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 Malta at least 10 per cent 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 payable in
respect of the following items of income the Malta tax paid under the
laws of Malta and in accordance with this Agreement:
aa) dividends not dealt with in sub-paragraph a) above;
bb) items of income that may be taxed in Malta according to paragraph 2 of
Article 13;
cc) directors’ fees;
dd) items of income of artistes and sportsmen.
c ) For the purposes of sub-paragraph b) of this paragraph,
aa) dividends referred to in sub-paragraph b) of paragraph 3 of
Article 10, and
bb) dividends paid out of profits benefiting out of any time-limited
exemption or reduction of tax granted under incentive provisions
contained in the Malta law designed to promote economic
development to the extent that such exemption or reduction is
granted for profits from industrial or manufacturing activities,
agriculture, fishing, tourism (including restaurants and hotels)
and other activities as may be agreed upon by the competent
authorities, provided that the activities have been carried out
within Malta, shall be subject to German tax on the amount after
the deduction of Malta tax paid (if any) on the profits out of
which the dividends are paid under the laws of Malta and in
accordance with this Agreement, and a tax of 20 per cent
calculated on the gross amount of the dividends shall be deemed
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE FEDERAL REPUBLIC OF GERMANY _g S.L.123.06 15
to have been paid in Malta. The provisions of this sub-paragraph
shall apply for the first ten years during which this Agreement is
effective. This period may be extended by mutual agreement
between the competent authorities.
d ) 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 Malta in the business
year for which the dividends were paid was derived exclusively or
almost exclusively from activities within the meaning of nos.1 to 6 of
paragraph 1 of section 8 of the German Law on External Tax Relations
(Aussensteuergesetz) or from participations within the meaning of
paragraph 2 of section 8 of that Law; the same shall apply to immovable
property used by a 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 3 of
Article 13).
e ) Where a company being a resident of the Federal Republic of Germany
distributes income derived from sources within Malta, sub-paragraph a)
shall not preclude the compensatory imposition of corporation tax on
such distributions in accordance with the provisions of German tax law.
f ) Notwithstanding the provisions of sub-paragraph a) double taxation
shall be avoided by allowing a tax credit as laid down in sub-paragraph
b) - 
aa) if in the Contracting States items of income or capital are placed
under differing provisions of the Agreement or attributed to
different persons (except pursuant to Article 9) and this conflict
cannot be settled by a procedure in accordance with paragraph 3
of Article 25 and if as a result of this difference in placement or
attribution the relevant income or capital would remain untaxed
or be too lowly taxed, or
bb) if after proper consultation and subject to the limitations of its
domestic law a Contracting State notifies the other Contracting
State through diplomatic channels of other income to which it
intends to apply the provisions of this paragraph. The notification
shall not take effect until the first day of the calendar year
following the year in which the notification was made and all
legal requirements under the domestic law of the notifying State
for the notification to take effect have been fulfilled.
2. Tax shall be determined in the case of a resident of Malta as follows:
Subject to the provisions of the law of Malta regarding the allowance of a credit
against Malta tax in respect of foreign tax, where, in accordance with the provisions
of this Agreement, there is included in a Malta assessment income from sources
within the Federal Republic of Germany, the German tax paid on such income shall
be allowed as a credit against Malta tax payable thereon.
16 _g S.L.123.06
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE FEDERAL REPUBLIC OF GERMANY
Article 24
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in the other
Contracting State to any taxation or any requirement connected therewith which is
other or more burdensome than the taxation and connected requirements to which
nationals of that other State in the same circumstances, especially with respect to
residence, are or may be subjected. This provision shall, notwithstanding the
provisions of Article 1, also apply to persons who are not residents of one or both of
the Contracting States.
2. Stateless persons who are residents of a Contracting State shall not be
subjected in either Contracting State to any taxation or any requirement connected
therewith, which is other or more burdensome than the taxation and connected
requirements to which nationals of the State concerned in the same circumstances
are or may be subjected.
3. The taxation on a permanent establishment which an enterprise of a
Contracting State has in the other Contracting State shall not be less favourably
levied in that other State than the taxation levied on enterprises of that other State
carrying on the same activities. This provision shall not be construed as obliging a
Contracting State to grant to residents of the other Contracting State any personal
allowances, reliefs and reductions for taxation purposes which it grants only to its
own residents.
4. Except where the provisions of paragraph 1 of Article 9, paragraph 4 of
Article 11, or paragraph 4 of Article 12 apply, interest, royalties and other
disbursements paid by an enterprise of a Contracting State to a resident of the other
Contracting State shall, for the purpose of determining the taxable profits of such
enterprise, be deductible under the same conditions as if they had been paid to a
resident of the first-mentioned State. Similarly, any debts of an enterprise of a
Contracting State to a resident of the other Contracting State shall, for the purpose of
determining the taxable capital of such enterprise, be deductible under the same
conditions as if they had been contracted to a resident of the first-mentioned State.
5. Enterprises of a Contracting State, the capital of which is wholly or partly
owned or controlled, directly or indirectly, by one or more residents of the other
Contracting State, shall not be subjected in the first-mentioned State to any taxation
or any requirement connected therewith which is other or more burdensome than the
taxation and connected requirements to which other similar enterprises of the first-
mentioned State are or may be subjected.
Article 25
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the Contracting
States result or will result for him in taxation not in accordance with the provisions
of this Agreement, he may, irrespective of the remedies provided by the domestic
law of those States, present his case to the competent authority of the Contracting
State of which he is a resident or, if his case comes under paragraph 1 of Article 24,
to that of the Contracting State of which he is a national. The case must be presented
within three years from the first notification of the action resulting in taxation not in
accordance with the provisions of the Agreement.
2. The competent authority shall endeavour, if the objection appears to it to be
justified and if it is not itself able to arrive at a satisfactory solution, to resolve the
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE FEDERAL REPUBLIC OF GERMANY _g S.L.123.06 17
case by mutual agreement with the competent authority of the other Contracting
State, with a view to the avoidance of taxation which is not in accordance with the
Agreement. Any agreement reached shall be implemented notwithstanding any time
limits in the domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall endeavour to
resolve by mutual agreement any difficulties or doubts arising as to the
interpretation or application of the Agreement. They may also consult together for
the avoidance of double taxation in cases not provided for in the Agreement.
4. If the taxation of income in a Contracting State is effected by way of a
withholding tax at source, and if this taxation is limited by the provisions of this
Agreement, the application of this tax reduction or exemption shall be governed by
the national law of that State in conjunction with the procedures agreed upon for this
purpose between the competent authorities of the two Contracting States.
5. The competent authorities of the Contracting States may communicate with
each other directly for the purpose of reaching an agreement in the sense of the
preceding paragraphs.
Article 26
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall exchange such
information as is necessary for carrying out the provisions of this Agreement or of
the domestic laws of the Contracting States concerning taxes covered by the
Agreement insofar as the taxation thereunder is not contrary to the Agreement. The
exchange of information is not restricted by Article 1. Any information received by a
Contracting State shall be treated as secret in the same manner as information
obtained under the domestic laws of that State and shall be disclosed only to persons
or authorities (including courts and administrative bodies) involved in the
assessment or collection of, the enforcement or prosecution in respect of, or the
determination of appeals in relation to, the taxes covered by the Agreement. Such
persons or authorities shall use the information only for such purposes. They may
disclose the information in public court proceedings or in judicial decisions. Any
subsequent supply to other agencies may be effected only with the prior approval of
the data-supplying State.
2. In no case shall the provisions of paragraph 1 be construed as to impose on a
Contracting State the obligation:
a ) to carry out administrative measures at variance with the laws and
administrative practice of that or of the other Contracting State;
b ) to supply information which is not obtainable under the laws or in the
normal course of the administration of that or of the other Contracting
State;
c ) to supply information which would disclose any trade, business,
industrial, commercial or professional secret or trade process, or
information the disclosure of which would be contrary to public policy
(ordre public).
18 _g S.L.123.06
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE FEDERAL REPUBLIC OF GERMANY
Article 27
LIMITATION OF BENEFITS
1. This Agreement shall not be interpreted to mean that
a ) a Contracting State is prevented from applying its domestic legal
provisions on the prevention of tax evasion or tax avoidance;
b ) the Federal Republic of Germany is prevented from levying taxes on
amounts which are to be included in the items of income of a resident of
the Federal Republic of Germany under the Fourth Part of the German
Law on External Tax Relations (Aussensteuergesetz).
2. The provisions of this Agreement shall not apply to companies or other
persons enjoying a special fiscal treatment by virtue of the laws or the administrative
practice of either one of the Contracting States. Neither shall they apply to income
derived from such companies or other persons derived by a resident of the other
Contracting State, nor to shares or other rights in such companies owned by such a
resident.
Article 28
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Agreement shall effect the fiscal privileges of members of a
diplomatic mission, a consular post or an international organisation under the
general rules of international law or under the provisions of special agreements.
Article 29
APPLICATION OF PROTOCOL
The attached Protocol shall be an integral part of this Agreement.
Article 30
REGISTRATION OF AGREEMENT
Registration of this Agreement with the Secretariat of the United Nations, in
accordance with Article 102 of the Charter of the United Nations, shall be initiated
jointly by both Contracting States, immediately after its entry into force.
Article 31
ENTRY INTO FORCE
1. This Agreement shall be ratified and the instruments of ratification shall be
exchanged at Valletta as soon as possible.
2. This Agreement shall enter into force on the date of exchange of the
instruments of ratification and its provisions shall have effect in both Contracting
States:
a ) in the case of taxes withheld at source, in respect of amounts paid on or
after the first day of January of the calendar year next following that in
which the Agreement entered into force;
b ) in the case of other taxes, in respect of taxes levied for assessment
periods beginning on or after the first day of January of the calendar
year next following that in which the Agreement entered into force.
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE FEDERAL REPUBLIC OF GERMANY _g S.L.123.06 19
3. Upon the entry into force of this Agreement, the Agreement between the
Federal Republic of Germany and Malta for the Avoidance of Double Taxation
signed on 17th September 1974 shall expire and shall cease to have effect as from
the date on which the provisions of this Agreement commence to have effect.
Article 32
TERMINATION
This Agreement shall continue in effect indefinitely but either of the
Contracting States may, on or before the thirtieth day of June in any calendar year
beginning after the expiration of a period of five years from the date of its entry into
force, give the other Contracting State, through diplomatic channels, written notice
of termination and, in such event, this Agreement shall cease to have effect:
a ) in the case of taxes withheld at source, in respect of amounts paid on or
after the first day of January of the calendar year next following that in
which notice of termination is given;
b ) in the case of other taxes, in respect of taxes levied for assessment
periods beginning on or after the first day of January of the calendar
year next following that in which notice of termination is given.
DONE at Berlin this 8th day of March, 2001 in two originals, each in the German
and English languages, both texts being equally authentic.
For Malta For the Federal Republic of Germany
Joe Borg Wolfgang Ischinger
Minister of Foreign Affairs Secretary of State
20 _g S.L.123.06
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE FEDERAL REPUBLIC OF GERMANY
PROTOCOL
Malta and The Federal Republic of Germany have agreed, at the signing at Berlin
on 8 March 2001 of the Agreement between the two States for the avoidance of
double taxation with respect to taxes on income and on capital, upon the following
provisions, which shall form an integral part of the said Agreement:
1. With reference to Article 7:
a ) Where an enterprise of a Contracting State sells goods or merchandise
or carries on business in the other Contracting State through a
permanent establishment situated therein, the profits of that permanent
establishment shall not be determined on the basis of the total amount
received therefor by the enterprise but only on the basis of the payments
which are attributable to the actual activity of the permanent
establishment for such sales or business.
b ) In the case of contracts, in particular for the survey, supply, installation
or construction of industrial, commercial or scientific equipment or
premises, or of public works, where the enterprise has a permanent
establishment in the other Contracting State, the profits of such
permanent establishment shall not be determined on the basis of the
total amount of the contract, but only on the basis of that part of the
contract which is effectively carried out by the permanent establishment
in the Contracting State in which it is situated. Profits derived from the
supply of goods to that permanent establishment or profits related to the
part of the contract which is carried out in the Contracting State in
which the head office of the enterprise is situated shall be taxable only
in that State.
c ) Payments received as a consideration for technical services, including
studies or surveys of a scientific, geological or technical nature, or for
engineering contracts including blueprints related thereto, or for
consultancy or supervisory services shall be deemed to be payments to
which the provisions of Article 7 or Article 14 of the Agreement apply.
2. With reference to Article 10:
The provisions of paragraph 3 of Article 10 shall continue to apply in Malta
as long as Malta operates the full imputation system of taxation of company profits
and of the subsequent distribution of such profits to the company’s shareholders.
Should the present system be changed, the rates referred to in sub-paragraph a) of
paragraph (2) of Article 10 shall apply to dividends distributed by a company which
is a resident of Malta to a resident of the Federal Republic of Germany. However, in
the event of such change, the Contracting States shall consult each other to consider
whether any such change in Malta’s system of taxation would necessitate any
revision of the provisions of Article 10.
3. With reference to Articles 10 and 11:
Notwithstanding the provisions of Articles 10 and 11, income derived in the
Federal Republic of Germany from rights or debt-claims participating in profits
including income of a sleeping partner ("stiller Gesellschafter") from his
participation as such or from a "partiarisches Darlehen" or "Gewinnobligationen"
that is deductible in determining the profits of the debtor may be taxed in the Federal
Republic of Germany according to the laws of the Federal Republic of Germany.
4. With reference to Article 26:
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE FEDERAL REPUBLIC OF GERMANY _g S.L.123.06 21
To the extent that personal data are exchanged under this Agreement and in
accordance with domestic legal provisions, the following additional provisions shall
apply, regard being had to the legal provisions applicable to the respective
Contracting State:
a ) The data-receiving State may use such data only for the stated purpose
and shall be subject to the conditions prescribed by the data-supplying
State.
b ) The data-receiving State shall on request inform the data-supplying
State about the use of the supplied data and the results achieved thereby.
c ) The data-supplying State shall be obliged to ensure that the data to be
supplied are accurate and that they are necessary for and proportionate
to the purpose for which they are supplied. Any bans on data supply
prescribed under applicable domestic law shall be observed. If it
emerges that inaccurate data or data which should not have been
supplied have been supplied, the data-receiving State shall be informed
of this without delay. That State shall be obliged to correct or erase such
data.
d ) Upon application the person concerned shall be informed of the
supplied data relating to him and of the use to which such data are to be
put. There shall be no obligation to furnish this information if on
balance it turns out that the public interest in withholding it outweighs
the interest of the person concerned in receiving it. In all other respects,
the right of the person concerned to be informed of the existing data
relating to him shall be governed by the domestic law of the Contracting
State in whose sovereign territory the application for the information is
made.
e ) The data-receiving State shall bear liability in accordance with its
domestic laws in relation to any person suffering unlawful damage as a
result of supply under the exchange of data pursuant to this Agreement.
In relation to the damaged person, the data-receiving State may not
plead to its discharge that the damage had been caused by the data-
supplying State.
f ) If the domestic law of the data-supplying State provides for special
provisions for the evasion of the personal data supplied, that State shall
inform the data-receiving State accordingly. Irrespective of such law,
supplied personal data shall be erased once they are no longer required
for the purpose for which they were supplied.
g ) The Contracting States shall be obliged to keep official records of the
supply and receipt of personal data.
h ) The data-supplying and the data-receiving States shall be obliged to
take effective measures to protect the personal data supplied against
unauthorised access, unauthorised alteration and unauthorised
disclosure.
5. With reference to Article 27:
It is understood that in the case of Malta the persons who enjoy a special
fiscal treatment referred to in paragraph 2 of Article 27 are the following:
a ) persons who are entitled to a special tax benefit under the Malta
Financial Services Centre Act (Cap. 330) except for those persons who
opt under section 41 of the said Act to be subject to the normal
provisions of the Income Tax Act (Cap. 123) and the Income Tax
22 _g S.L.123.06
DOUBLE TAXATION RELIEF ON TAXES ON INCOME
WITH THE FEDERAL REPUBLIC OF GERMANY
Management Act, 1994; or
b ) persons who and to the extent to which under the provisions of the
Merchant Shipping Act, 1973 are not subject to tax on the profits
derived from the operation of ships in international traffic; or
c ) persons entitled to any special tax benefit in respect of distributions by a
trust subject to the provisions of the Trusts Act given that a trust as laid
down in that Act is not vested with legal personality and therefore
cannot benefit under this Agreement in its own right; or
d ) persons entitled to any special tax benefit under any substantially
similar law subsequently enacted which is considered in mutual
agreement by the competent authorities of the Contracting States as
special fiscal treatment within the meaning of paragraph 2 of Article 27
of this Agreement.
