The National Assembly of the Republic of Armenia has ratified the agreement signed on June 29, 2016, in Yerevan, titled "On the Exclusion of Double Taxation of Income and Property between the Republic of Armenia and the Federal Republic of Germany and Preventing Tax Evasion," which came into force on January 1, 2017.
The purpose of the agreement is to develop economic relations between the parties, improve cooperation on tax matters, and ensure the effective and proper collection of taxes, exclude double taxation of income and property, and thus reduce the negative impact of obstacles related to income and property taxes on international trade and investment, as well as create a predictable and stable tax environment.
The agreement specifically defines the status of residents (Article 4), the concept of a permanent establishment (Article 5), provisions related to income from immovable property and profits from business activities (Articles 6, 7), provisions related to maritime and air transport, associated enterprises, and dividends (Articles 8, 9, 10), provisions regulating interest and royalties (Articles 11, 12), as well as other procedural requirements and conditions necessary for the operation of the Agreement.
The agreement defines the types of taxable property and income of individuals who are residents of one or both contracting states, including taxes on income derived from the sale of movable or immovable property, taxes on the total amounts of salaries and other payments made by enterprises, as well as taxes on capital gains.
In the Republic of Armenia, the Agreement will apply to profit tax, income tax, and property tax (Article 2, paragraph 3, subparagraph "a").
The parties to the Agreement undertake to refrain from taxing the income received by individuals who are residents of the other contracting party or both, the taxation rights of which are reserved for the other contracting party under the Agreement, and vice versa.
In addition to the aforementioned obligations, the Republic of Armenia, on the basis of reciprocity, undertakes a number of other obligations, in particular:
- to ensure that the competent authorities of the Republic of Armenia notify the competent authorities of the German side of any significant changes in the tax laws of the Republic of Armenia (Article 2, paragraph 4),
not to tax a student or intern who is a resident of the German side or who was a resident of the German side immediately before arriving in the Republic of Armenia and is in the Republic of Armenia exclusively for their studies or internships on payments received in connection with their stay, studies, or internships in the Republic of Armenia, provided that such payments arise from sources outside the Republic of Armenia (Article 19, paragraph 2),
not to subject citizens of the Federal Republic of Germany, as well as stateless persons who are residents of the Federal Republic of Germany, to any other or more burdensome taxation or related obligations in the Republic of Armenia than those to which citizens of the Republic of Armenia are or may be subjected under the same circumstances (Article 23, paragraphs 1 and 2),
to ensure that the taxation of a permanent establishment of a German enterprise in the Republic of Armenia is not less favorable than the taxation of an enterprise conducting similar activities in the Republic of Armenia (Article 23, paragraph 3),
not to subject enterprises in the Republic of Armenia, whose property is wholly or partially owned or directly or indirectly controlled by one or more residents of the Federal Republic of Germany, to any other or more burdensome taxation or related requirements in the Republic of Armenia than those to which other similar enterprises in the Republic of Armenia are or may be subjected (Article 23, paragraph 5),
to ensure that the competent authorities of the Republic of Armenia exchange information with the competent authorities of the Federal Republic of Germany that is deemed appropriate for the implementation of the provisions of the Agreement or for the application or enforcement of domestic laws, and to guarantee that the information received by the Republic of Armenia will be considered confidential and will be communicated only to those individuals or bodies (including courts and administrative bodies) involved in the assessment or collection of the relevant taxes, enforcement of tax claims, or judicial proceedings, as well as in the examination of appeals, and to ensure that such individuals or bodies will use the information only for such purposes (Article 25, paragraphs 1 and 2),
to ensure the supremacy of international law whenever the territorial application of the Agreement is defined (Paragraph 1 of the Protocol), and so on.
The Agreement is subject to ratification and enters into force on the date of the exchange of instruments of ratification (Article 31 of the Agreement) and remains in effect until its termination by the contracting states.