News

 

Taiwan-Germany tax agreement takes effect in 2013
 

2013/01/01

Taiwan and Germany have signed a tax agreement that, when it takes effect on January 1, 2013, will allow Taiwanese and German companies and individuals to avoid double taxation. It also provides for relatively low rates of taxation. It will deepen bilateral substantive relations and further promote two-way investment, trade, and technological exchange.

The Ministry of Finance (MOF) points out that Germany’s rate of income tax comes to 15.83%, which is lower than Taiwan’s business income tax rate of 17%. For German companies with no fixed place of business in Taiwan, income from investments on the island are taxed at 20%; and some of this tax burden cannot be offset from taxes due at home, making the tax burden on investments in Taiwan comparatively heavy. Under the newly signed tax agreement, earnings by German companies from investments in Taiwan will be taxed at a maximum of 17% of net operating income, and the companies will be allowed to offset the tax they pay in Taiwan from tax due back in Germany.

The tax burden will also be alleviated for Taiwanese companies investing in Germany. Prior to the tax agreement, the stock dividends they received from investments in Germany are taxed at a rate of 26.38%; with the new agreement, this will fall to 10% and greatly lighten the tax burden on Taiwanese investors.

Germany is the largest economy in the European Union. A total of 250 Taiwanese firms have established bases in Germany, investing a cumulative amount of about US$200 million there, and German enterprises have invested US$1.9 billion in Taiwan. Bilateral trade continued to grow last year, even with the debt crisis that ravaged Europe, increasing 10.29% over the 2010 figure to reach US$16.2 billion (about NT$466 billion).

Germany is the 11th country in Europe, and the 24th country worldwide, with which Taiwan has signed a comprehensive bilateral agreement for the avoidance of double taxation.

CEPD

Ufficio di Rappresentanza di Taipei - Viale Liegi n.17, 00198 Roma | Tel. 06-98262800 - P. Iva 97076980586