(1) Tax shall be determined in the case of a resident of the
Federal Republic of Germany as follows:
a) Unless foreign tax credit is to be allowed under sub-para-
graph b), there shall be exempted from the assessment
basis of the German tax any item of income arising in the
Syrian Arab Republic which, according to this Agreement,
may be taxed in the Syrian Arab Republic.
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 the
Federal Republic of Germany by a company being a resi-
dent of the Syrian Arab Republic 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.
b) Subject to the provisions of German tax law regarding cred-
it for foreign tax, there shall be allowed as a credit against
German tax on income payable in respect of the following
items of income the Syrian tax paid under the laws of the
Syrian Arab Republic and in accordance with this Agree-
ment:
aa) dividends not dealt with in sub-paragraph a);
bb) interest;
cc) royalties;
dd) items of income that may be taxed in the Syrian Arab
Republic according to paragraph 2 of Article 13;
ee) items of income that may be taxed in the Syrian Arab
Republic according to paragraph 3 of Article 15;
ff)
directors’ fees;
gg) items of income in the meaning of article 17.
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 income is derived if the resident of the Federal Repub-
lic 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 the
Syrian Arab Republic in the business year for which the div-
idends were paid was derived exclusively or almost exclu-
sively from activities within the meaning of nos. 1 to 6 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 perma-
nent establishment (paragraph 4 of Article 6) and to profits
from the alienation 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 3 of Article 13).
d) 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, 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 are placed
under differing provisions of this Agreement or attrib-
uted to different persons (except pursuant to Article 9)
and this conflict cannot be settled by a procedure in
accordance with paragraph 3 of Article 24 and if as a
result of this difference in placement or attribution the
relevant income would remain untaxed or be taxed
lower than without this conflict or
bb) if after due consultation with the competent authority of
the Syrian Arab Republic the Federal Republic of Ger-
many notifies the Syrian Arab Republic through diplo-
matic 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 calen-
dar year, next following that in which the notification
was made.
(2) Tax shall be determined in the case of a resident of the
Syrian Arab Republic as follows:
a) Where a resident of the Syrian Arab Republic derives
income which, in accordance with the provisions of this
Agreement, may be taxed in the Federal Republic of Ger-
many, the Syrian Arab Republic shall allow a deduction from
the tax of that resident equal to the income tax paid in the
Federal Republic of Germany. Such deduction shall not,
however, exceed that part of the income tax, as computed
before the deduction is given, which may be attributable to
the income which may be taxed in the Federal Republic of
Germany.
b) Where in accordance with any provision of this Agreement,
income derived by a resident of the Syrian Arab Republic is
exempt from tax in the Syrian Arab Republic the Syrian Arab
Republic may nevertheless, in calculating the rate of tax on
the remaining income of such resident, take into account
the exempted income.