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(1) Subject to any provisions of the law of New Zealand which may from time to time be in force and which relate to the allowance of a credit against New Zealand tax of tax paid in a country outside New Zealand, German tax paid under the law of the Federal Republic of Germany and consistently with this Agreement, whether directly or by deduction, in respect of in- come derived by a New Zealand resident from sources in the Federal Republic of Germany (excluding, in the case of a divi- dend, tax paid in respect of the profits out of which the dividend is paid) shall be allowed as a credit against New Zealand tax payable in respect of that income.
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(2) Tax shall be determined in the case of a resident of the Federal Republic of Germany as follows: a) Unless the provisions of sub-paragraph b) apply, there shall be exluded from the basis upon which German tax is imposed, any item of income arising in New Zealand and any item of capital situated within New Zealand which, ac- cording to this Agreement, may be taxed in New Zealand. 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 excluded. In the case of income from shares the foregoing provisions shall apply only to such income as is paid to a company (not including partnerships) being a resident of the Federal Re- public of Germany by a company being a resident of New Zealand at least 25 per cent of the capital of which is owned directly by the German company. For the purposes of taxes on capital there shall also be ex- cluded from the basis upon which German tax is imposed any shareholding, the dividends of which are excluded or, if paid, would be excluded, according to the immediately foregoing sentence, from the basis upon which German tax is imposed. Subject to the provisions of German tax law regarding b = credit for foreign tax, there shall be allowed as a credit against German income and corporation tax payable in re- spect of the following items of income arising in New Zea- land the New Zealand tax paid under the laws of New Zea- land and in accordance with this Agreement on: aa) dividends within the meaning of Article 10, para- graph 3 and not dealt with in sub-paragraph a); bb) interest within the meaning of Article 11, paragraph 4; cc) royalties within the meaning of Article 12, paragraph 3; dd) income to which Articles 16 and 17 apply; ee) income taxable in New Zealand in accordance with Ar- ticle 21, paragraph 1. In such a case New Zealand tax payable under the laws of New Zealand and in accordance with this Agreement on the above-mentioned items of income shall, subject to the pro- visions of German tax law regarding credit for foreign tax, be allowed as a credit against German income or corpora- tion tax payable on such items of income.
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(3) For the purposes of this Article profits, income or gains of a resident of one Contracting State shall be regarded as arising from sources in the other Contracting State if they have been subjected to taxation in that other State in accordance with this Agreement.