1. Where an individual who is a resident of a Contracting
State is a member or beneficiary of, or participant in, a pension
plan established in the other Contracting State, income earned
by the pension plan may be taxed as income of that individual
only when, and, to the extent that, it is paid to, or for the
benefit of, that individual from the pension plan (and not
transferred to another pension plan in that other Contracting
State).
2. Where an individual who is a beneficiary of, or participant
in, a pension plan established in a Contracting State exercises
an employment or self-employment in the other Contracting
State:
a) contributions paid by or on behalf of that individual to the
pension plan during the period or attributable to the period
that he exercises an employment or self-employment in the
other State shall be deductible (or excludable) in computing
his taxable income in that other State; and
b) any benefits accrued under the pension plan, or contributions
made to the pension plan by or on behalf of the individual’s
employer, during that period shall not be treated as part of
the employee’s taxable income; any such contributions shall
be allowed as a deduction in computing the business
profits of his employer in that other State.
The relief available under this paragraph shall not exceed the
relief that would be allowed by the other State to residents of
that State for contributions to, or benefits accrued under, a
pension plan or plans established in that State. The competent
authorities of the Contracting States shall determine the relief
available under this paragraph pursuant to the preceding
sentence.
3. The provisions of paragraph 2 shall not apply unless:
a) contributions by or on behalf of the individual, or by or on
behalf of the individual’s employer were made before the
individual began to exercise an employment or self-employ-
ment in the other State; and
b) the pension plan is accepted by the competent authority of
that State as generally corresponding to a pension plan
recognized as such for tax purposes by that State.
4. The term “pension plan” means an arrangement
established in a Contracting State which is operated principally
to administer or provide pension or retirement benefits or to
earn income for the benefit of one or more such arrangements.
5.
a) Where a citizen of the United States who is a resident of the
Federal Republic of Germany exercises an employment in
the Federal Republic of Germany the income from which is
taxable in the Federal Republic of Germany and is borne by
an employer who is a resident of the Federal Republic of
Germany or by a permanent establishment situated in the
Federal Republic of Germany, and the individual is a
beneficiary of, or participant in, a pension plan established
in the Federal Republic of Germany,
aa) contributions paid by or on behalf of that individual to
the pension plan during the period or attributable to the
period that he exercises the employment in the Federal
Republic of Germany, and that are attributable to the
employment, shall be deductible (or excludable) in
computing his taxable income in the United States; and
bb) any benefits accrued under the pension plan, or
contributions made to the pension plan by or on behalf
of the individual’s employer, during that period or
attributable to that period, and that are attributable to
the employment, shall not be treated as part of the
employee’s taxable income in computing his taxable
income in the United States.
This paragraph shall apply only to the extent that the
contributions or benefits qualify for tax relief in the Federal
Republic of Germany.
b) The relief available under this paragraph shall not exceed
the relief that would be allowed by the United States to its
residents for contributions to, or benefits accrued under, a
generally corresponding pension plan established in the
United States.
c) For purposes of determining an individual’s eligibility to
participate in and receive tax benefits with respect to a
pension plan established in the United States, contributions
made to, or benefits accrued under, a pension plan
established in the Federal Republic of Germany shall be
treated as contributions or benefits under a generally
corresponding pension plan established in the United
States to the extent relief is available to the individual under
this paragraph.
d) This paragraph shall not apply unless the competent
authority of the United States has agreed that the pension
plan generally corresponds to a pension plan established in
the United States.