Article 1  Personal Scope
This Agreement shall apply to persons who are residents of
one or both of the Contracting States.

Article 2  Taxes Covered
1. This Agreement shall apply to taxes on income and on
capital imposed on behalf of a Contracting State, irrespective
of the manner in which they are levied.
2. There shall be regarded as taxes on income and on capital
all taxes imposed on total income, on total capital, or on
elements of income or of capital, including taxes on gains
from the alienation of movable or immovable property, as well
as taxes on capital appreciation.
3. The existing taxes to which the Agreement shall apply are:
(a) in the People's Republic of China:
(i) the individual income tax;
(ii) the income tax concerning joint ventures with Chinese
and foreign investment;
(iii) the income tax concerning foreign enterprises; and
(iv) the local income tax
(hereinafter referred to as "Chinese tax" ) ;
(b) in the Federal Republic of Germany:
(i) the individual income tax (die Einkommensteuer) ;
(ii) the corporate income tax (die Korperschaftsteuer) ;
(iii) the capital tax (die Vermgensteuer) ; and
(iv) the trade tax (die Gewerbesteuer)
(hereinafter referred to as "German tax" ) .
4. The Agreement shall apply also to any identical or
substantially similar taxes which are imposed after the date
of signature of the Agreement in addition to, or in place of,
the existing taxes. Within reasonable periods of time, the
competent authorities of the Contracting States shall notify
each other of changes which have been made in their respective
taxation laws.
Article 3
General Definitions
1. For the purposes of this Agreement, unless the context
otherwise requires:
(a) the terms "a Contracting State" and "the other
Contracting State" mean, as the context requires, the People's
Republic of China or the Federal Republic of Germany, and when
used in a geographical sense, the territory in which the tax
laws of the relevant Contracting State are in force, including
the territorial sea and areas beyond the territorial sea
within which the relevant Contracting State may, in accordance
with international law, exercise the right of exploration for
and exploitation of the natural resources of the seabed and
its subsoil;
(b) the term "person" includes an individual, a company and
any other body of persons;
(c) the term "company" means any body corporate or any
entity which is treated as a body corporate for tax purposes;
(d) the terms "enterprise of a Contracting State" and
"enterprise of the other Contracting State" mean respectively
an enterprise carried on by a resident of a Contracting State
and an enterprise carried on by a resident of the other
Contracting State;
(e) the term "national" means an individual who under the
laws of a Contracting State possesses the nationality of that
Contracting State, as well as a legal person, partnership and
association deriving its status as such from the laws in force
in a Contracting State;
(f) the term "international traffic" means any transport by
a ship or aircraft operated by an enterprise which has its
place of head office in a Contracting State, except when the
ship or aircraft is operated solely between places in the
other Contracting State;
(g) the term "competent authority" means in the case of the
People's Republic of China the Ministry of Finance or its
authorised representative and in the case of the Federal
Republic of Germany the Federal Ministry of Finance.
2. As regards the application of the Agreement by a
Contracting State any term not defined therein shall, unless
the context otherwise requires, have the meaning which it has
under the law of that State concerning the taxes to which the
Agreement applies.
Article 4
Resident
1. For the purposes of this Agreement, the term "resident of
a Contracting State" means any person who, under the laws of
that State, is liable to tax therein by reason of his
domicile, residence, place of head office or any other
criterion of a similar nature.
2. Where by reason of the provisions of paragraph 1 an
individual is a resident of both Contracting States, then his
status shall be determined as follows:
(a) he shall be deemed to be a resident of the State in
which he has a permanent home available to him; if he has a
permanent home available to him in both States; he shall be
deemed to be a resident of the State with which his personal
and economic relations are closer (centre of vital interests)
;
(b) if the State in which he has his centre of vital
interests cannot be determined, or if he has not a permanent
home available to him in either State, he shall be deemed to
be a resident of the State in which he has an habitual abode;
(c) if he has an habitual abode in both States or in neither
of them, he shall be deemed to be a resident of the State of
which he is a national;
(d) if he is a national of both States or of neither of
them, the competent authorities of the Contracting States
shall settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person
other than an individual is a resident of both Contracting
States, then it shall be deemed to be a resident of the State
in which its place of head office is situated.
Article 5
Permanent Establishment
1. For the purposes of this Agreement, the term "permanent
establishment" means a fixed place of business through which
the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop; and
(f) a mine, an oil or gas well, a quarry or any other place
of extraction of natural resources.
3. The term "permanent establishment" shall also include:
(a) a building site or assembly project or any supervising
activities connected therewith, if the construction, assembly
or supervising activities last for more than 6 months;
(b) the furnishing of services, including consultancy
services, by an enterprise of a Contracting State through its
employees or other personnel, when the activities in the other
Contracting State (for the same or a connected project)
continue for a period or periods aggregating more than 6
months within any 12-month period.
4. Notwithstanding paragraphs 1 to 3 of this Article, the
term "permanent establishment" shall be deemed not to include:

(a) the use of facilities solely for the purpose of storage,
display or delivery of goods or merchandise belonging to the
enterprise;
(b) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of storage,
display or delivery;
(c) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of
processing by another enterprise;
(d) the maintenance of a fixed place of business solely for
the purpose of purchasing goods or merchandise or of
collecting information, for the enterprise;
(e) the maintenance of a fixed place of business solely for
the purpose of carrying on, for the enterprise, any other
activity of a preparatory or auxiliary character;
(f) the maintenance of a fixed place of business solely for
any combination of activities mentioned in sub-paragraphs (a)
to (e), provided that the overall activity of the fixed place
of business resulting from this combination is of a
preparatory or auxiliary character.
5. Notwithstanding the provisions of paragraphs 1 and 2,
where a person-other than an agent of an independent status to
whom paragraph 6 applies-is acting on behalf of an enterprise
and has, and habitualy exercises in a Contracting State an
authority to conclude contracts in the name of the enterprise,
that enterprise shall be deemed to have a permanent
establishment in that State in respect of any activities which
that person undertakes for the enterpise, unless the
activities of such person are limited to those mentioned in
paragraph 4 which, if exercised through a fixed place of
business, would not make this fixed place of business a
permanent establishment under the provisions of that
paragraph.
6. An enterprise shall not be deemed to have a permanent
establishment in a Contracting State merely because it carries
on business in that State through a broker, general commission
agent or any other agent of an independent status, provided
that such persons are acting in the ordinary course of their
business.
7. The fact that a company which is a resident of a
Contracting State controls or is controlled by a company which
is a resident of the other Contracting State, or which carries
on business in that other State (whether through a permanent
establishment or otherwise), shall not of itself constitute
either company a permanent establishment of the other.
Article 6
Income from Immovable Property
1. Income derived by a resident of a Contracting State from
immovable property situated in the other Contracting State may
be taxed in that other State.
2. The term "immovable property" shall have the meaning
which it has under the law of the Contracting State in which
the property is situated. The term shall in any case include
property accessory to immovable property, livestock and
equipment used in agricultural and forestry, rights to which
the provisions of general law respecting landed property
apply, usufruct of immovable property and rights to variable
or fixed payments as consideration for the working of, or the
right to work, mineral deposits, sources and other natural
resources; ships and aircraft shall not be regarded as
immovable property.
3. The provisions of paragraph 1 shall apply to income
derived from the direct use, letting, leasing, or use in any
other form of immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to
the income from immovable property of an enterprise and to
income from immovable property used for the performance of
independent personal services.
Article 7
Business Profits
1. The profits of an enterprise of a Contracting State shall
be taxable only in that State unless the enterprise carries on
business in the other Contracting State through a permanent
establishment situated therein. If the enterprise carries on
business as aforesaid, the profits of the enterprise may be
taxed in the other State but only so much of them as is
attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an
enterprise of a Contracting State carries on business in the
other Contracting State through a permanent establishment
situated therein, there shall in each Contracting State be
attributed to that permanent establishment the profits which
it might be expected to make if it were a distinct and
separate enterprise engaged in the same or similar activities
under the same or similar conditions and dealing wholly
independently with the enterprise of which it is a permanent
establishment.
3. In determining the profits of a permanent establishment,
there shall be allowed as deductions expenses which are
incurred for the purposes of the permanent establishment,
including executive and general administrative expenses so
incurred, whether in the State in which the permanent
establishment is situated or elsewhere.
4. Insofar as it has been customary in a Contracting State
to determine the profits to be attributed to a permanent
establishment on the basis of an apportionment of the total
profits of the enterprise to its various parts, nothing in
paragraph 2 shall preclude that Contracting State from
determining the profits to be taxed by such an apportionment
as may be customary; the method of apportionment adopted
shall, however, be such that the result shall be in accordance
with the principles contained in this Article.
5. No profits shall be attributed to a permanent
establishment by reason of the mere purchase by that permanent
establishment of goods or merchandise for the enterprise.
6. For the purposes of paragraphs 1 to 5, the profits to be
attributed to the permanent establishment shall be determined
by the same method year by year unless there is good and
sufficient reason to the contrary.
7. Where profits include items of income which are dealt
with in other Articles of this Agreement, then the provisions
of those Articles shall not be affected by the provisions of
this Article.
Article 8
Shipping and Air Transport
1. Profits from the operation of ships or aircraft in
international traffic shall be taxable only in the Contracting
State in which the place of head office of the enterprise is
situated.
2. If the place of head office of a shipping enterprise is
aboard a ship, then it shall be deemed to be situated in the
Contracting State in which the home harbour of the ship is
situated, or, if there is no such home harbour, in the
Contracting State of which the operator of the ship is a
resident.
3. The provisions of paragraph 1 shall also apply to profits
from the participation in a pool, a joint business or an
international operating agency.
Article 9
Associated Enterprises
Where
(a) an enterprise of a Contracting State participates
directly or indirectly in the management, control or capital
of an enterprise of the other Contracting State, or
(b) the same persons participate directly or indirectly in
the management, control or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting
State;
and in either case conditions are made or imposed between the
two enterprises in their commercial or financial relations
which differ from those which would be made between
independent enterprises, then any profits which would, but for
those conditions, have accrued to one of the enterprises, but,
by reason of those conditions, have not so accrued, may be
included in the profits of that enterprise and taxed
accordingly.
Article 10
Dividends
1. Dividends paid by a company which is a resident of a
Contracting State to a resident of the other Contracting State
may be taxed in that other State.
2. However, such dividends may also be taxed in the
Contracting State of which the company paying the dividends is
a resident and according to the laws of that State, but if the
recipient is the beneficial owner of the dividends the tax so
charged shall not exceed 10 per cent of the gross amount of
the dividends.
This paragraph shall not affect the taxation of the company
in respect of the profits out of which the dividends are paid.

3. The term "dividends" as used in this Article means income
from shares, mining shares, founders' shares or other rights,
not being debt-claims, participating in profits, as well as
income from other corporate rights which is subjected to the
same taxation treatment as income from shares by the laws of
the State of which the company making the distribution is a
resident.
4. The provisions of paragraphs 1 and 2 shall not apply if
the beneficial owner, being a resident of a Contracting State,
carries on business in the other Contracting State of which
the company paying the dividends is a resident, through a
permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base
situated therein and the holding in respect of which the
dividends are paid is effectively connected with such
permanent establishment or fixed base. In such case the
provisions of Article 7 or Article 14, as the case may be,
shall apply.
5. Where a company which is a resident of a Contracting
State derives profits or income from the other Contracting
State, that other State may not impose any tax on the
dividends paid by the company, except insofar as such
dividends are paid to a resident of that other State or
insofar as the holding in respect of which the dividends are
paid is effectively connected with a permanent establishment
or a fixed base situated in that other State, nor subject the
company's undistributed profits to a tax on undistributed
profits, even if the dividends paid or the undistributed
profits consist wholly or partly of profits or income arising
in such other State.
Article 11
Interest
1. Interest arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that
other State.
2. However, such interest may also be taxed in the
Contracting State in which it arises and according to the laws
of that State. But if the recipient is the beneficial owner of
the interest the tax so charged shall not exceed 10 per cent
of the gross amount of the interest.
3. Notwithstanding the provisions of paragraph 2, interest
(a) derived from the Federal Republic of Germany is exempt
from German tax, if paid:
(i) to the Government of the People's Republic of China;
(ii) to the People's Bank of China, the Agricultural Bank
of China, the People's Construction Bank of China, the
Investment Bank of China or the Industrial and Comnercial Bank
of China;
(iii) on a loan directly guaranteed or financed by the Bank
of China or the Chinese International Trust and Investment
Company; or
(iv) to public credit institution of the Government of the
People's Republic of China, if the competent authorities of
both States have mutually agreed thereto;
(b) derived from the People's Republic of China is exempt
from Chinese tax, if paid:
(i) to the Government of the Federal Republic of Germany;
(ii) to the Deutsche Bundesbank, the Kredietanstalt für
Wiederaufbau or the Deutsche Finanzierungsgesellschaft für
Beteiligungen in Entwicklungslndern (the German Federal Bank,
the Credit Institure for Reconstruction, or the German Finance
Company for Investment in Developing Countries) ;
(iii) on a loan, directly guaranteed or financed by Hermes;
or
(iv) to a public credit institution of the Federal
Government, if the competent authorities of both States have
agreed thereto.
4. The term "interest" as used in this Article means income
from debt-claims of every kind, whether or not secured by
mortgage and whether or not carrying a right to participate in
the debtor's profits, and in particular, income from
government securities and income from bonds or debentures,
including premiums and prizes attaching to such securities,
bonds or debentures. Penalty charges for late payment shall
not be regarded as interest for the purpose of this Article.
5. The provisions of paragraphs 1 to 3 shall not apply if
the beneficial owner of the interest being a resident of a
Contracting State, carries on business in the other
Contracting State in which the interest arises, through a
permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base
situated therein, and the debt-claim in respect of which the
interest is paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of
Article 7 or Article 14, as the case may be, shall apply.
6. Interest shall be deemed to arise in a Contracting State
when the payer is that State itself, a local authority or a
resident of that State. Where, however, the person paying the
interest, whether he is a resident of a Contracting State or
not, has in a Contracting State a permanent establishment or a
fixed base in connection with which the indebtedness on which
the interest is paid was incurred, and such interest is borne
by such permanent establishment or fixed base, then such
interest shall be deemed to arise in the State in which the
permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and
some other person, the amount of the interest, having regard
to the debt-claim for which it is paid, exceeds the amount
which would have been agreed upon by the payer and the
beneficial owner in the absence or such relationship, the
provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other
provisions of this Agreement.
Article 12
Royalties
1. Royalties arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that
other State.
2. However, such royalties may also be taxed in the
Contracting State in which they arise and according to the
laws of that State, but if the recipient is the beneficial
owner of the royalties, the tax so charged shall not exceed 10
per cent of the gross amount of the royalties.
3. The term "royalties" as used in this Article means
payments of any kind received as a consideration for the use
of, or the right to use, any copyright of literary, artistic
or scientific work including cinematograph films and films or
tapes for broadcasting or television, any patent, trade mark,
design or model, plan, secret formula or process, or for the
use of, or the right to use, industrial, commercial, or
scientific equipment, or for information concerning
industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if
the beneficial owner of the royalties, being a resident of a
Contracting State, carries on business in the other
Contracting State in which the royalties arise, through a
permanent establishment situated therein, or performs in that
other State independent personal services from a fixed base
situated therein, and the right or property in respect of
which the royalties are paid is effectively connected with
such permanent establishment or fixed base. In such case the
provisions of Article 7 or Article 14, as the case may be,
shall apply.
5. Royalties shall be deemed to arise in a Contracting State
when the payer is the Government of that State itself, a local
authority or a resident of that Contracting State. Where,
however, the person paying the royalties, whether he is a
resident of a Contracting State or not, has in a Contracting
State a permanent establishment or a fixed base in connection
with which the obligation to pay the royalties was incurred,
and those royalties are borne by that permanent establishment
or fixed base, then such royalties shall be deemed to arise in
the Contracting State in which the permanent establishment or
fixed base is situated.
6. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and
some other person, the amount of the royalties, having regard
to the use, right or information for which they are paid,
exceeds the amount which would have been agreed upon by the
payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only
to the last-mentioned amount. In such case, the excess part of
the payments shall remain taxable according to the laws of
each Contracting State, due regard being had to the other
provisions of this Agreement.
Article 13
Capital Gains
1. Gains derived by a resident of a Contracting State from
the alienation of immovable property referred to in Article 6
and situated in the other Contracting State may be taxed in
that other State.
2. Gains from the alienation of movable property forming
part of the business property of a permanent establishment
which an enterprise of a Contracting State has in the other
Contracting State or of movable property pertaining to a fixed
base available to a resident of a Contracting State in the
other Contracting State for the purpose of performing
independent personal services, including such gains from the
alienation of such a permanent establishment (alone or with
the whole enterprise) or of such a fixed base, may be taxed in
that other State.
3. Gains from the alienation of ships or aircraft operated
in international traffic, or movable property pertaining to
the operation of such ships, aircraft or boats, shall be
taxable only in the Contracting State in which the place of
head office of the enterprise is situated.
4. Gains derived by a resident of a Contracting State from
the alienation of any property other than that referred to in
paragraphs 1 to 3 and which is situated in the other
Contracting State, may be taxed in that other State.
Article 14
Independent Personal Services
1. Income derived by a resident of a Contracting State in
respect of professional services or other activities of an
independent character shall be taxable only in that State.
However, such income may also be taxed in the other
Contracting State:
(a) if he has a fixed base regularly available to him in the
other Contracting State for the purpose of performing his
activities but only so much of the income as is attributable
to that fixed base; or
(b) if his stay in the other Contracting State is for a
period or periods, in the aggregate, more than 183 days in the
calendar year concerned, only so much of the income as is
derived from the activities in that other State.
2. The term "professional services" includes especially
independent scientific, literary, artistic, educational or
teaching activities as well as the independent activities of
physicians, lawyers, engineers, architects, dentists and
accountants.
Article 15
Dependent Personal Services
1. Subject to the provisions of Articles 16, 18, 19, 20 and
21, salaries, wages and other similar remuneration derived by
a resident of a Contracting State in respect of an employment
shall be taxable only in that State unless the employment is
exercised in the other Contracting State. If the employment is
so exercised, such remuneration as is derived therefrom may be
taxed in that other State.
2. Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting
State shall be taxable only in the first-mentioned State if:
(a) the recipient is present in the other State for a period
or periods not exceeding in the aggregate 183 days in the
calendar year concerned; and
(b) the remuneration is paid by, or on behalf of, an
employer who is not a resident of the other State; and
(c) the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the
other State.
3. Notwithstanding the preceding provisions of this Article,
remuneration derived in respect of an employment exercised
aboard a ship or aircraft operated in international traffic,
may be taxed in the Contracting State in which the place of
head office of the enterprise is situated.
Article 16
Directors' Fees
Directors' fees and other similar payments derived by a
resident of a Contracting State in his capacity as a member of
the board of directors of a company which is a resident of the
other Contracting State may be taxed in that other State.
Article 17
Artistes and Athletes
1. Notwithstanding the provisions of Articles 14 and 15,
income derived by a resident of a Contracting State as an
entertainer, such as a theatre, motion picture, radio or
television artiste, or a musician, or as an athlete, from his
personal activities as such exercised in the other Contracting
State, may be taxed in that other State.
2. Where income in respect of personal activities exercised
by an entertainer or an athlete in his capacity as such
accrues not to the entertainer or athlete himself but to
another person, that income may, notwithstanding the
provisions of Articles 7, 14 and 15, be taxed in the
Contracting State in which the activities of the entertainer
or athlete are exercised.
3. Notwithstanding the provisions of paragraphs 1 and 2,
income derived by an entertainer or athlete who is resident in
a Contracting State from activities exercised in the other
Contracting State within the framework of a cultural exchange
program agreed upon by the Governments of both Contracting
States shall not be taxed in that other State.
Article 18
Pensions
Subject to the provisions of paragraph 2 of Article 19,
pensions and other similar remuneration paid to a resident of
a Contracting State in consideration of past employment shall
be taxable only in that State.
Article 19
Government Service
1.
(a) Remuneration, other than a pension, paid by a
Contracting State or a local authority or organ thereof to an
individual in respect of services rendered to that State,
authority or organ shall be taxable only in that State.
(b) However, such remuneration shall be taxable only in the
other Contracting State if the services are rendered in that
other State and the individual is a resident of that other
State who:
(i) is a national of that other State; or
(ii) did not become a resident of that other State solely
for the purpose of rendering the services.
2.
(a) Any pension paid by a Contracting State or a local
authority or organ thereof to an individual in respect of
services rendered to that State or authority or organ shall be
taxable only in that State.
(b) However, such pension shall be taxable only in the other
Contracting State if the individual is a resident of, and a
national of, that other State.
3. The provisions of Articles 15, 16, 17 and 18 shall apply
to remuneration and pensions in respect of services rendered
in connection with a business carried on by a Contracting
State or a local authority or organ thereof.
Article 20
Professors and Researchers
1. A professor or researcher who is, or was immediately
before visiting the other a Contracting State, a resident of a
Contracting State and who is present in the first-mentioned
Contracting State for a period not exceeding three years for
the purpose of advanced study to research or for the purpose
of teaching at a university, college, school or any other
eductional or research institution shall be exempt from tax in
the other Contracting State in respect of remuneration derived
from such activities.
2. The provisions of paragraph 1 shall not apply to income
from research, if this research is not in the public interest
but primarily for the private benefit of a certain person or
persons.
Article 21
Students and Trainees
A student, business apprentice or trainee who is a resident
of a Contracting State or was, immediately before visiting the
other Contracting State, a resident of the first-mentioned
State and who is present in the other State solely for the
purpose of his education or training, shall be exempt from tax
in that other State on:
(a) all payments made by persons outside the other State for
the purpose of his maintenance, or training; and
(b) all scholarships, allowances or maintenance payments
paid by governmental, charitable, scientific, cultural or
educational organizations for the purpose of his maintenance,
education or training; and
(c) income from personal services performed in the other
Contracting State during in the aggregate not more than 5
years and in an amount not exceeding 6, 000 DM or its
equivalent in Chinese currency RMB per calendar year, for the
purpose of supplementing his income for his maintenance,
education or training.
Article 22
Other Income
1. Items of income of a resident of a Contracting State,
wherever arising, not dealt with in the foregoing Articles of
this Agreement shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income,
other than income from immovable property as defined in
paragraph 2 of Article 6, if the recipient of such income,
being a resident of a Contracting State, carries on business
in the other Contracting State through a premanent
establishment situated therein, or performs in that other
State independent personal services from a fixed base situated
therein, and the right or property in respect of which the
income is paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of
Article 7 or Article 14, as the case may be, shall apply.
3. Notwithstanding the provisions of paragraphs 1 and 2,
items of income of a resident of a Contracting State which are
not covered under the preceding Articles of this Agreement may
be taxed in the other Contracting State, if they are arising
in that other State.
Article 23
Capital
1. Capital represented by immovable property referred to in
Article 6, owned by a resident of a Contracting State and
situated in the other Contracting State, may be taxed in that
other State.
2. Capital represented by movable property forming part of
the business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting
State or by movable property pertaining to a fixed base
available to a resident of a Contracting State in the other
Contracting State for the purpose of performing independent
personal services, may be taxed in that other State.
3. Capital represented by ships or aircraft operated in
international traffic, and by movable property pertaining to
the operation of such ships or aircraft, shall be taxable only
in the Contracting State in which the place of head office of
the enterprise is situated.
4. All other elements of capital of a resident of a
Contracting State shall be taxable only in that State.
Article 24
Methods for the Elimination of Double Taxation
1. For a resident of the People's Republic of China double
taxation shall be eliminated as follows:
(a) the German tax levied in accordance with the provisions
of this Agreement on income derived from the Federal Republic
of Germany shall be allowed as a credit against the Chinese
tax to be paid by that resident in the People's Republic of
China. The amount of German tax to be credited, however, shall
not exceed the amount of Chinese tax computed with respect to
such income in accordance with the tax regulations of the
People's Republic of China;
(b) where the income consists of dividends paid by a company
which is a resident of the Federal Republic of Germany to a
company which is a resident of the People's Republic of China
and which owns at least 10 per cent of the capital of the
first-mentioned company the tax paid by the first-mentioned
company may be credited against the tax imposed by the
People's Republic of China, to the extent it can be attributed
to such dividends.
2. For a resident of the Federal Republic of Germany double
taxation shall be eliminated as follows:
(a) Unless the provisions of subparagraph (b) apply, there
shall be excluded from the basis upon which German tax is
imposed any item of income arising in the People's Republic of
China and any item of capital situated within the People's
Republic of China which, according to this Agreement, may be
taxed in the People's Republic of China. 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 excluded.
In the case of dividends the foregoing provisions 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 the
People's Republic of China at least 10 per cent of the capital
of which is owned directly by the German company.
For the purposes of taxes on capital there shall also be
excluded from the basis upon which German tax is imposed any
shareholding, the dividends from which, if paid, would be
excluded according to the immediately foregoing sentence from
the basis upon which German tax is imposed.
(b) Subject to the provisions of German tax law regarding
credit for foreign tax, a credit shall be allowed against
German individual income and corporate income tax payable in
respect of the following items of income arising in the
People's Republic of China, the Chinese tax paid under Chinese
laws and in accordance with this Agreement on:
(i) dividends not dealt with in subparagraph (a) ;
(ii) interest;
(ii) royalties;
(iv) income to which paragraph 4 of Article 13 applies;
(v) remuneration to which Article 16 applies;
(vi) income to which Article 17 applies;
(vii) income to which paragraph 3 of Article 22 applies.
(c) For the purpose of subparagraph (b) the Chinese tax to
be credited shall be deemed to be:
(i) in the case of dividends referred to in sub-paragraph
(b) under (i) : 10 per cent of the gross amount of dividends;
(ii) in the case of interest and royalties referred to in
sub-paragraph (b) under (ii) and (iii) : 15 per cent of the
gross amount of such payments.

Article 25 Non-Discrimination
1. Nationals of a Contracting State shall not be subjected
in the other Contracting State to any taxation or any
requirement connected therewith, which is other or more
burdensome than the taxation and connected requirements to
which nationals of that other State in the same circumstances
are or may be subjected. This provision shall, notwithstanding
the provisions of Article 1, also apply to persons who are not
residents of a Contracting State.
2. The taxation on a permanent establishment which an
enterprise of a Contracting State has in the other Contracting
State shall not be less favourably levied in that other State
than the taxation levied on enterprises of that other State
carrying on the same activities. This provision shall not be
construed as obliging a Contracting State to grant to
residents of the other Contracting State any personal
allowances, reliefs and reductions for taxation purposes on
account of civil status or family responsibilities which it
grants exclusively to its own residents.
3. Except where the provisions of Article 9, paragraph 7 of
Article 11 or paragraph 6 of Article 12 apply, interest,
royalties and other disbursements paid by an enterprise of a
Contracting State to a resident of the other Contracting State
shall, for the purpose of determining the taxable profits of
such enterprise, be deductible under the same conditions as if
they had been paid to a resident of the first-mentioned State.
Similarly, any debts of an enterprise of a Contracting State
to a resident of the other Contracting State shall, for the
purpose of determining the taxable capital of such enterprise,
be deductible under the same conditions as if they had been
contracted to a resident of the first-mentioned State.
4. Enterprises of a Contracting State, the capital of which
is wholly or partly owned or controlled, directly or
indirectly, by one or more residents of the other Contracting
State, shall not be subjected in the first-mentioned State to
any taxation or any requirement connected therewith which is
other or more burdensome than the taxation and connected
requirements to which other similar enterprises of that
first-mentioned State are or may be subjected.
5. The provisions of this Article shall, notwithstanding the
provisions of Article 2, apply to taxes of every kind and
description.
Article 26
Mutual Agreement Procedure
1. Where a person considers that the actions of one or both
of the Contracting States result or will result for him in
taxation not in accordance with the provisions of this
Agreement, he may, irrespective of the remedies provided by
the domestic law of those States, present his case to the
competent authority of the Contracting State of which he is a
resident or, if his case comes under paragraph 1 of Article
25, to that of the Contracting State of which he is a
national. The case must be presented within three years from
the first notification of the action resulting in taxation not
in accordance with the provisions of the Agreement.
2. The competent authority shall endeavour, if the objection
appears to it to be justified and if it is not itself able to
arrive at a satisfactory solution, to resolve the case by
mutual agreement with the competent authority of the other
Contracting State, with a view to the avoidance of taxation
not in accordance with the Agreement. Any agreement reached
shall be implemented notwithstanding any time limits in the
domestic law of the Contracting States.
3. The competent authorities of the Contracting States shall
endeavour to resolve by mutual agreement any difficulties or
doubts arising as to the interpretation or application of the
Agreement. They may also consult together for the elimination
of double taxation in cases not provided for in the Agreement.

4. The competent authorities of the Contracting States may
communicate with each other directly for the purpose of
reaching an agreement in the sense of the preceding
paragraphs.
Article 27
Exchange of Information
1. The competent authorities of the Contracting States shall
exchange such information as is necessary for carrying out the
provisions of this Agreement. Any information received by a
Contracting State shall be treated as secret in the same
manner as information obtained under the domestic laws of that
State and shall be disclosed only to persons or authorities
(including courts and administrative bodies) involved in the
assessment or collection of, the enforcement or prosecution in
respect of, or the determination of appeals in relation to,
the taxes covered by the Agreement. Such persons or
authorities shall use the information only for such purposes.
They may disclose the information in public court proceedings
or in judicial decisions.
2. In no case shall the provisions of paragraph 1 be
construed so as to impose on a Contracting State the
obligation:
(a) to carry out administrative measures at variance with
the laws and administrative practice of that or of the other
Contracting State;
(b) to supply information which is not obtainable under the
laws or in the normal course of the administration of that or
of the other Contracting State;
(c) to supply information which would disclose any trade,
business, industrial, commercial or professional secret or
trade process, or information, the disclosure of which would
be contrary to public policy (ordre public) .
Article 28
Diplomatic Agents and Consular Officers
Nothing in this Agreement shall affect the fiscal privileges
of diplomatic Agents or consular officers under the general
rules of international law or under the provisions of special
agreements.
Article 29
Berlin Clause
This Agreement shall also apply to Berlin (West) in
accordance with the procedure agreed upon.
Article 30
Entry into Force
This Agreement shall enter into force on the thirtieth day
following the date on which each of the two Governments has
notified the other that the procedures required by its law for
the bringing into force of this Agreement have been completed.
The Agreement shall have effect:
(a) on taxes withheld at the source on dividends paid on or
after 1 January 1985;
(b) on taxes withheld at source on interest or royalties
paid on or after 1 July 1985;
(c) on other taxes, for any tax year beginning on or after
1 January 1985.
Article 31
Termination
This Agreement shall continue in effect indefinitely but
either Contracting State may, on or before the thirtieth day
of June in any calendar year beginning after the expiration of
a period of five years from the date of its entry into force,
give to the other Contracting State, through diplomatic
channels, written notice of termination; in such case the
Agreement shall cease to have effect:
(a) on taxes withheld at source on dividends, interest and
royalties paid on or after 1 January of the year following
that in which the notice is given;
(b) on other taxes, for any tax year beginning on or after 1
January of the year following that in which the notice is
given.
DONE in duplicate at Bonn this 10th day of June 1985, in the
Chinese and German languages, both texts being equally
authentic.
For the People's For the
Federal
Republic of China Republic of
Germany






PROTOCOL
Have agreed, at the signing of the Agreement between the two
States for the avoidance of double taxation with respect to
taxes on income and capital, upon the following provisions,
which shall form a part of the Agreement:
1. With reference to Article 7:
(a) Only that part of the profits of a building site or
assembly project may be allocated to the Contracting State in
which the permanent establishment is situated, as is derived
from the carrying out of such activities. Where in connection
with these activities or independently thereof, machinery or
equipment is supplied by the head office or another permanent
establishment of the enterprise or by unrelated persons, then
the value of such supply shall not be attributed to the
profits of the building site or assembly project.
(b) Income which is attributable to the drawing of plans,
projects or construction or research activities, as well as
engineering services, which a resident of a Contracting State
prepares or carries out in that Contracting State and which
are connected with a permanent establishment maintained in the
other Contracting State, shall not be allocated to that
permanent establishment.
(c) Notwithstanding the provisions of paragraph 3, no
deduction shall be allowed in respect of amounts paid
(otherwise than towards reimbursement of actual expenses) by
the permanent establishment to the head office or any other
permanent establishment of the enterprise by way of:
(i) royalties, fees or other similar payments in return for
the use of patents or other rights;
(ii) commissions for specific services performed or for
management; and
(iii) interest on moneys lent to the permanent
establishment, except in the case of a banking institute.
2. With respect to Article 8:
This Agreement shall not affect the provisions of Article 8
of the Agreement on shipping enterprises concluded between the
two Contracting States on 31 October 1975 and the Exchange of
Notes with respect to the taxation of air transport
enterprises of both parties between the two Contracting States
of 27 February／14 March 1980.
3. With respect to Article 10:
(a) As long as in a Contracting State the rate of corporate
income tax on distributed profits is lower than the rate on
undistributed profits and the difference between the two rates
is 15 percentage points or more, then the tax on dividends
paid by a company which is a resident of that State to a
resident of the other Contracting State may, notwithstanding
the provisions of paragraph 2, not exceed 15 per cent of the
gross amount of the dividend.
(b) The term "dividends" referred to in paragraph 3 shall
also include income of a silent partner from his participation
in a silent partnership and distributions on participations in
an investment fund.
4. With respect to Articles 10 and 11:
Notwithstanding the provisions of Articles 10 and 11,
dividends and interest may be taxed in the Contracting State
in which they arise, and according to the law of that State,
if they
(a) are derived from rights or debt-claims carrying a right
to participate in profits (including income derived by a
silent partner from his participation as such, from a
"partiarisches Darlehen" and from "Gewinnobligationen" within
the meaning of the tax law of the Federal Republic of Germany)
; and
(b) are deductible in the determination of profits of the
debtor of such dividends or interest.
5. With respect to Article 12:
For the application of the percentage rate referred to in
paragraph 2 there shall be taken as the taxable base of the
royalties paid for the use of or the right to use any
industrial, commercial or scientific equipment, 70 per cent of
the gross amount of these payments.
6. With respect to Article 24, paragraph 2:
(a) Where a company being a resident of the Federal
Republic of Germany distributes income derived from sources
within the People's Republic of China, paragraph 2 shall not
preclude the compensatory imposition of corporation tax in
accordance with the provisions of German tax law.
(b) The provisions of paragraph 2, sub-paragraphs (a) and
(c), shall only apply to profits of a permanent establishment
and to the capital represented by movable and immovable
property forming part of the business property of a permanent
establishment, and to the gains from the alienation of such
property, to dividends paid by a company and to the
participation in a company, if the resident of the Federal
Republic of Germany concerned proves that the receipts of the
permanent establishment or company are derived exclusively or
almost exclusively
(i) from one of the following activities carried on in the
People's Republic of China: producing or selling goods or
merchandise, giving technical advice or rendering engineering
services, or doing banking or insurance business, or
(ii) from dividends paid by one or more companies, being
residents of the People's Republic of China, more than 25 per
cent of the capital of which is owned by the first-mentioned
company, which themselves derive their receipts exclusively or
almost exclusively from one of the following activities
carried on in the People's Republic of China: producing or
selling goods or merchandise, giving technical advice or
rendering engineering services, or doing banking or insurance
business.
If the provisions of paragraph 2, sub-paragraphs (a) and (c)
are not applicable, then the Chinese tax which is payable
under the laws of the People's Republic of China and in
accordance with this Agreement on the above-mentioned items of
income and capital shall, subject to the provisions of German
tax law regarding credit for foreign tax against the German
individual income tax or corporate income tax, be allowed as a
credit against German individual income tax or corporate
income tax payable on such items of income or against German
capital tax payable on such items of capital.
7. With respect to Article 27:
It is understood that German tax law for the prevention of
tax evasion provides under certain conditions, that, upon
request, information may be supplied and that it is possible
in accordance with these provisions, notwithstanding this
Article, to supply information to the competent authorities of
the People's Republic of China.
DONE at Bonn, on 10 June 1985, in duplicate, in the Chinese
and German languages, both texts being equally authentic.

For the People's For the FederalRepublic of China Republic of Germany

Bright Jon,  Attorney-at-law   Fax: +86-512-53516040   email@colaw.cn
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