The main objective of the changes to the 2015 DBA is to remove tax barriers and create a more favourable investment environment between Australia and Germany. Reducing withholding tax in particular circumstances will reduce investment and business costs between the two countries and further grow trade relations. Strengthening economic ties with Germany will not only allow Australia to have significant strategic access to the European market, but also reduce its dependence on the Chinese economy. 1 Australia`s income tax agreements will be subject to income tax by the International Tax Agreements Act of 1953. The agreement between the Australian Bureau of Trade and Industry and the Taipei Economic and Cultural Office on the prevention of double taxation and the prevention of income tax evasion is a less treaty-compliant document, adopted as Schedule 1 of the International Tax Agreements Act of 1953. Regardless of this, the interest tax exemption provided by the 2015 DBA recognizes that the 10% tax rate may be excessive given the cost of funds for certain types of businesses. This will reduce investment costs between Australia and Germany and further growth in trade relations between the two countries. Under the 1972 DBA, the country of origin can withhold up to 10% of the value of interest paid between Australia and Germany. When an Australian resident company pays dividends, interest or royalties to a foreign company, it is normally obliged to pay withholding tax – i.e. income tax paid – on foreign payments (and vice versa).1 Withholding taxes amount to 30% on dividends and royalties and 10% on interest.2 These rates are lowered by the DBA between Australia and a number of countries. including Germany.
The new double taxation agreement between Australia and Germany has now come into force. Under the 1972 DBA, the country of origin may apply a 10% withholding rate on royalties paid between Australia and Germany. The 2015 DBA reduces this rate to 5%. The DBA 2015 reinforces the definition of the EP in Article 5: the recent changes to civil aviation safety rules in 1998 (CASR) and the introduction of a new Part 139 (airfield) Standard Manual 2019 (new MOS) are currently posing challenges for small airfield operators.