Israeli Finance Minister Yair Lapid and his German counterpart, Wolfgang Schäuble, have signed a revised German-Israeli double taxation agreement in Berlin.
The pact has been amended to make it correspond to modern international tax law and current economic relations between Israel and Germany and will improves the exchange of information on tax matters between the two states, bringing it into line with international standards.
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Additionally, the revised agreement will facilitate international investment activity between Germany and Israel and will promote bilateral economic ties.
As per the terms of the new agreement, pensions that are paid as compensation for political persecution or for injury or damage sustained as a result of war (including restitution payments) will not be taxed in either of the two states.
The accord will see the reduction of withholding tax on interest and dividends from 25% to 10% and even to 5% under certain circumstances. Also right to tax royalties will be completely eliminated.
The agreement is based on the Organization for Economic Cooperation and Development’s model for international agreements for the avoidance of double taxation.
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By GlobalDataThe agreement, which was last amended in 1977, included only exchange of notes between Israel and Germany.
