The new double tax agreement between Australia and Germany has
now entered into force.
This is the first treaty in Australia which reflects the
OECD's Base Erosion and Profit Sharing (generally known as
'BEPS') Project recommendations for tax
treaties. Changes introduced by this treaty will impact current
structures and future deals involving German entities. Also, this
is likely to be a template for Australia's treaties into the
future.
BEPS recommendations
Features which implement BEPS Project recommendations
include:
- The definition of 'permanent establishment' has been
substantially expanded, with the result that it will be harder for
German businesses to carry on activities in Australia without being
taxed in Australia. For example, activities of closely related
enterprises are to be aggregated in determining whether, together,
they constitute a permanent establishment in Australia.
