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The Taipei Representative Office in the Federal Republic of Germany and the German Institute in Taipei for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital ("Taiwan-German Tax Treaty, the Treaty") came into effect on 7 November 2012 and the applicable date is from 1 January 2013. Therefore, starting from 1 January 2013; the tax residents of Germany, who receive Taiwan-sourced income, which is subject to the withholding tax, such as the dividends, interests and royalties, shall be allowed to apply the 10 % withholding tax rate. As for the income in relation to business profit, it shall be exempt from Taiwan income tax if the German tax resident has no permanent establishment ("PE") in Taiwan. Even if it has a PE in Taiwan, it shall be subject to Taiwan income tax on the business profit that is attributable to the PE only.
