Source paragraph 1
(1) In the case of a resident of the Federal Republic of Germany‚ tax shall be determined as follows: a) Unless foreign tax credit is to be allowed under subparagraph (b)‚ there shall be exempted from the assessment basis of the German tax any item of income arising in South Africa and any item of capital situated within South Africa which‚ according to this Agreement‚ may be taxed in South Africa. 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 exempted. 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 resident of South Africa 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 preceding provisions of this subparagraph. b) Subject to the provisions of German tax law regarding credit 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 South African tax paid under the laws of South Africa and in accordance with this Agreement: i. dividends not dealt with in subparagraph (a); ii. items of income that may be taxed in South Africa according to paragraph 2 of Article 13; iii. items of income that may be taxed in South Africa according to paragraph 3 of Article 14; iv. directors’ fees; v. items of income of entertainers and sportspersons; vi. items of income that may be taxed in South Africa according to paragraph 1 of Article 17. c) The provisions of subparagraph (b) shall apply instead of the provisions of subparagraph (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 Republic 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 South Africa in the business year for which the dividends were paid was derived exclusively or almost exclusively from activities within the meaning of numbers 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 (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) Notwithstanding the provisions of subparagraph (a) double taxation shall be eliminated by allowing a tax credit as laid down in subparagraph (b): i. if in the Contracting States items of income or capital are placed under differing 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 24 and if as a result of this difference in placement or attribution the relevant income or capital would remain untaxed or the tax on that income or capital would be lower than the tax which would have applied but for this difference in placement or attribution; or ii. if after proper consultation and subject to the limitations of its domestic law‚ a Contracting State notifies the other Contracting State‚ through the diplomatic channel‚ of other income to which it intends to apply the provisions of this paragraph. The notification shall not take effect until the first day of the calendar year following the year in which the notification was made and all legal requirements under the domestic law of the notifying State for the notification to take effect have been fulfilled.
Source paragraph 2
(2) In the case of a resident of South Africa‚ subject to the provisions of the law of South Africa regarding the deduction from tax payable in South Africa of tax payable in any country other than South Africa (which shall not affect the general principle hereof)‚ German tax paid by residents of South Africa in respect of income taxable in the Federal Republic of Germany‚ in accordance with the provisions of this Agreement‚ shall be deducted from the taxes due according to South African fiscal law. Such deduction shall not‚ however‚ exceed an amount which bears to the total South African tax payable the same ratio as the income concerned bears to the total income.
Source paragraph 3
(3) For the purposes of this Article‚ profits‚ income or gains of a resident of a Contracting State (with the exception of income mentioned in paragraph 2 of Article 10 and in paragraphs 2 and 3 of Article 17) shall be deemed to arise from sources in the other Contracting State if they are taxed in that other State in accordance with this Agreement.