1. This Convention shall be ratified and the instruments of
ratification shall be exchanged at Washington as soon as pos-
sible.
2. This Convention shall enter into force on the date on
which the instruments of ratification are exchanged and shall
have effect in both Contracting States
a) in respect of taxes withheld at source as well as excise
taxes imposed on insurance premiums for amounts paid or
credited on or after 1 January, 1990;
b) in respect of other taxes on income for any taxable year
(Steuerjahr) or assessment period (Veranlagungszeitraum),
as the case may be, beginning on or after 1 January, 1990,
but excluding any fiscal year (Wirtschaftsjahr) commencing
before such date; and
c) in respect of taxes on capital for the taxes levied on items of
capital owned on or after 1 January, 1990.
3. Where any greater relief from tax would have been afford-
ed to a person entitled to the benefits of the Convention be-
tween the United States of America and the Federal Republic of
Germany for the Avoidance of Double Taxation with Respect to
Taxes on Income and to certain other Taxes, signed on 22 July,
1954, as amended by the Protocol signed on 17 September,
1965 (“the 1954 Convention”), under that Convention than
under this Convention, the 1954 Convention shall, at the elec-
tion of such person, continue to have effect in its entirety for the
first assessment period, or taxable year, with respect to which
the provisions of this Convention would otherwise have effect
under paragraph 2 b).
4. Notwithstanding the foregoing provisions of this Article,
the tax charged pursuant to paragraph 2 a) of Article 10 (Divi-
dends) on dividends (within the meaning of paragraph 4 of that
Article) paid or credited before 1 January, 1992, may exceed
5 percent of the gross amount of the dividends, but shall not
exceed 10 percent thereof.
5. Notwithstanding the foregoing provisions of this Article,
a) the provisions of paragraph 8 of Article 10 (Dividends) shall
have effect in respect of taxes levied on the dividend equiv-
alent amount for assessment periods or taxable years be-
ginning on or after 1 January, 1991, but excluding fiscal
years commencing before such date; for purposes of the
preceding sentence the dividend equivalent amount shall be
treated as paid on the last day of the company’s fiscal year;
b) the provisions of the fourth sentence of paragraph 2 a) of
Article 23 (Relief from Double Taxation) shall not have effect
on dividends paid by a Regulated Investment Company
prior to 1 January, 1991, provided that such Regulated In-
vestment Company was in existence on 1 October, 1988.
6. Notwithstanding the foregoing provisions of this Article,
the following shall apply with respect to items of income de-
scribed in Article 11 (Interest) and in paragraphs 4 and 5 of Ar-
ticle 10 (Dividends):
a) the 1954 Convention, and not this Convention, shall apply
to interest as that term is used in the 1954 Convention, in-
cluding interest derived from a “partiarisches Darlehen” or a
“Gewinnobligation”, paid or credited before 1 January,
1991;
b) income from debt obligations to which paragraph 4 of
Article 10 (Dividends) applies, and income derived from a
“partiarisches Darlehen” or a “Gewinnobligation” to which
paragraph 5 of Article 10 (Dividends) does not apply, and
that is paid or credited on or after 1 January, 1991, shall be
taxable in the Contracting State in which it arises at the
rates provided for in paragraphs 2 and 3 of Article 10;
c) income derived under a “Stille Gesellschaft”, and income
derived from “jouissance” shares or “jouissance” rights, to
which paragraph 5 of Article 10 (Dividends) applies and that
is paid or credited before 1 January, 1991, shall be taxable
in the Contracting State in which it arises at a rate not ex-
ceeding 15 percent of the gross amount;
d) income derived under a “Stille Gesellschaft”, and income
derived from “jouissance” shares or “jouissance” rights, to
which paragraph 5 of Article 10 (Dividends) does not apply,
shall be taxable in the Contracting State in which it arises at
the rates provided for in paragraphs 2 and 3 of Article 10 if
such income is paid or credited on or after 1 January, 1990;
and
e) the foregoing provisions of this paragraph shall not apply to
income described in paragraph 6 of Article 10 (Dividends) or
in paragraph 3 of Article 11 (Interest).
7. The 1954 Convention shall cease to have effect when the
provisions of this Convention take effect in accordance with this
Article.