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(1) Subject to the provisions of the laws of Ireland regarding the allowance as a credit against Irish tax of tax payable in a territory outside Ireland (which shall not affect the general principle hereof): a) German tax payable under the laws of Germany and in accordance with this Agreement, whether directly or by deduction, on profits, income or capital gains from sources within Germany (excluding in the case of a dividend tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any Irish tax computed by reference to the same profits, income or capital gains by reference to which German tax is computed; b) in the case of a dividend paid by a company which is a resi- dent of Germany to a company which is a resident of Ireland and which controls directly or indirectly 5 per cent or more of the voting power in the company paying the dividend, the credit shall take into account (in addition to any German tax creditable under the provisions of subparagraph a)) German tax payable by the company in respect of the profits out of which such dividend is paid; c) for the purposes of sub-paragraphs a) and b) profits, income and capital gains owned by a resident of Ireland which may be taxed in Germany in accordance with this Agreement shall be deemed to be derived from sources in Germany; d) where in accordance with any provision of the Agreement in- come derived by a resident of Ireland is exempt from Irish tax, Ireland may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.
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(2) Tax shall be determined in the case of a resident of Germany as follows: a) There shall be exempted from the assessment basis of the German tax any item of income arising in Ireland and any item of capital situated within Ireland which, according to this Agreement, is actually taxed in Ireland and is not dealt with in sub-paragraph b). 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 Germany by a company being a resident of Ireland 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 Irish tax paid under the laws of Ireland and in accordance with this Agreement: aa) dividends not dealt with in sub-paragraph a); bb) items of income that may be taxed in Ireland according to paragraph 4 of Article 13 (Capital gains); cc) directors’ fees; dd) items of income that may be taxed in Ireland according to Article 16 (Artistes and sportsmen). c) 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 in- come is derived if the resident 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 Ireland in the business year for which the dividends were paid was derived exclusively or almost exclusively from activities within the meaning of paragraph 1 of section 8 of the German Law on External Tax Relations (Außensteuergesetz); the same shall apply to immovable property used by a permanent establishment and to income from this immovable property of the permanent establish- ment (paragraph 4 of Article 6) and to profits from the alien- ation 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 2 of Article 13). d) Germany, however, retains the right to take into account in the determination of its rate of tax the items of income and capital, which are under the provisions of this Agreement exempted from German tax. e) 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 different provisions of this 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 26 and if as a result of this difference in placement or attribution the relevant income or capital would remain untaxed or be taxed lower than without this conflict or bb) if after due consultation with the competent authority of Ireland, Germany notifies Ireland through diplomatic channels of other items of income to which it intends to apply the provisions of sub-paragraph b). Double taxation is then avoided for the notified income by allowing a tax credit from the first day of the calendar year, following that in which the notification was made.