On 12 November 2015, Australia and Germany signed a new tax treaty. This treaty replaces a previous double taxation agreement between Australia and Germany signed in 1972. The treaty will reduce tax impediments to increased bilateral trade and investment and improve the integrity of the tax system. Importantly, it gives effect to the OECD/G20 Base Erosion and Profit Shifting (BEPS) recommendations, demonstrating the Australian Government’s continued commitment to tackling international tax avoidance practices.
The Government has developed draft legislation to give the new treaty the force of law in Australia and is now seeking comments on the proposed legislation and the accompanying explanatory memorandum. The treaty will enter into force after both countries have completed their respective domestic requirements and instruments of ratification have been exchanged.