New china DTA with France and Germany

New China – France DTA (26 Nov 2013)

1.  New treaty application to partnership or other similar entities

• Domestic laws may have different definitions for partnership and other kinds of entities. Difficulties may arise on the treaty benefit application to these entities. The new DTA between China and France provides a new provision under Resident Article to clarify treaty benefit to income, profits or gain derived through such entities under six different scenarios.
• Moreover, if the partnership is organized in a third country, and the third country also does not treat the partnership as taxable entity, the new DTA may also apply to those French tax resident partners.

2.  Adjustment of the PE article

• The time threshold for a building site, construction, assembly or installation project to constitute a PE is extended from six months to 12 months
• The time threshold for constituting a Service PE is changed from six months to 183 days within any 12 month period.
• Exclusion of supervision services in connection with the sale or lease of machinery or equipment from constituting a PE in the current protocol is now removed.

3.  Withholding income tax rates reduced

• The dividend withholding rate is reduced from 10% to 5% if the corporate beneficial owners hold directly at least 25% of the company
• 10% withholding tax rate remains for interest and royalty payments
• No taxes should be withheld on dividends, interest and capital gains derived by qualified sovereign wealth funds.

4.  Capital gain provision updated

• Share transfer of property-rich company, a 36-month look back period applies
• Share transfer of other type companies, a 12-month look back period applies where the transferor directly or indirectly held at least 25% of the shares in that company during that period

5.  Anti-treaty shopping provisions added

• An anti-treaty shopping article is inserted in the new DTA to disregard abusive transactions or arrangements.

6.  Tax sparing benefit is no longer available

• In order to achieve tax neutrality, the new DTA has removed the tax sparing clause and French residents can only claim foreign tax credit on the amount of China withholding tax actually paid.
• Tax sparing benefit is grandfathered for rental payments in relation to the leasing of movable properties provided that the equipment is delivered before 1 January 2013 and other specific conditions are met.

New China – Germany DTA (28 Mar 2014)

1.  PE articles adjusted

• The time threshold for a building site, construction, assembly or installation project to constitute a PE is extended from 6 months to 12 months.
• The time threshold for constitution a service PE is changed from 6 months to 183 days within any 12 month period. This offers a clearer and convenient approach to count the days in the determination of a service PE.
• The revised clause states that an agent who is devoting its activities wholly or almost wholly on behalf of an enterprise would be considered to be a dependent agent of that enterprise if the arm’s length relationship is absent between the agent and the enterprise.

2.  Further details on international transportation income

• The new DTA clarifies that profit from the operation of ships or aircrafts in international traffic also includes rental on a bare-boat basis of ships or aircrafts and the use of containers if such use or rental is incidental to the operation of ships or aircrafts in international traffic. In that respect, such profit is taxable only in the country of residence.

3.  Withholding income tax rates reduced

• The WHT rate for dividends is reduced from 10% to 5% if the beneficial owner of the dividends is a company which directly holds at least 25% of the capital of the company paying the dividends.
• 10% WHT rate remains on interest. However, interests paid to certain Chinese state-owned commercial banks will no longer be exempted from German tax under the new DTA.
• The restricted WHT rate on royalties paid for the use of equipment is reduced from 7% to 6%.

4.  Capital gains provision revamped

• China can only tax gains on share transfer when one of the following circumstances is met:

1. the gains are from the disposal of shares of a property-rich company or
2. the recipient of gains has a participation, directly or indirectly, of at least 25% in the capital of that company at any time during the 12-month period preceding such alienation.

• Regular trade of listed shares of a non-property-rich company on a recognized stock exchange is exempted from such source taxation as long as the total shares transferred in one year does not exceed 3% of the quoted shares.

5.  Anti-treaty abuse provisions added

• An anti-treaty abuse article is inserted in the new DTA to deny treaty benefits on arrangements or transactions entered into mainly for the purpose of obtaining such benefits. In addition, it allows China and Germany to apply their domestic laws to prevent treaty abuse.

6.  Tax sparing benefit is no longer available

• The 1985 DTA has a tax sparing clause which allows German tax residents to get a deemed China tax credit of 15% of interest and royalties regardless of what was actually paid. However, under the new DTA, only tax actually paid in China can be credited.

新中法双边税收协议 （2013年11月26日）

1. 明确合伙企业和其他类似实体税收协定的适用

• 不同国家的本土税法对某些实体的税务处理不尽相同。为解决这一问题，新中法协定在居民条款中分六种情况对通过这类实体取得的所得，利润或收益享受协定待遇分别予以明确。例如，一个设在法国的合伙企业从中国取得所得，假设根据法国的税法，该合伙企业在税收上被认定为无所得税纳税义务，那么根据新增条款，若该合伙企业的合伙人也是法国税收居民，该合伙人就有资格就该所得享受协定优惠。
• 此外，如果上述合伙企业设立在第三方国家，且第三方国家的税法也将该合伙企业视为非纳税实体，那么新中法协定仍然可以适用那些法国居民合伙人。

2.  调整常设机构的相关条款

• 建筑工地，建筑，装配或暗中工程的活动构成常设机构的期间从6个月延长到12个月
• 构成服务型常设机构的期限从任何连续12个月或累计超过6个月更改为183天。
• 删除现行的协定书中关于销售，租赁机器，设备的企业提供的监督管理活动不构成常设机构的规定。

3.  降低预提所得税率

• 如果企业受益所有人直接持有不低于股息分配企业25%的股份，则在来源国的预提所得税率从10%下降到5%。
• 利息，特许权使用费的预提所得税率仍然是10%。
• 对符合条件的主权财富基金受到的股息，利息和财产受益（不包括不动产收益）不征预提所得税

4.  修订财产受益条款

• 新中法协定没有改变划分股权转让所得征税权的原则，但进一步明确了来源国征税的情况，包括：1， 转让财产主要由不动产构成的公司（判断期为转让前的36个月）2， 转让其他公司时，转让方直接或间接参与公司至少25%的股份（判断期间为转让前的12个月）
• 新中法协定规定，转让该条款未列明的其他财产的收益，征税权从现行协定的来源国可以征税变为仅在居民国征税。

5.  新增防止滥用税收协定条款

• 新中法协定增加了防止滥用协定的条款，以打击滥用税收协定的安排或交易。此外，在有关股息，利息，特许权使用费和其他所得条款中都列入了防止滥用税收协定的限制性条款，一旦发现申请人的主要目的是滥用税收协定，所得来源国有权不给予协定待遇。

6.  取消税收饶让优惠

• 根据现行中法税收协定规定，无论法国居民实际负担多少中国税，都允许其可以按照视同股息10%或20%，利息10%以及特许权使用费20%的税率进行超额抵免。但新中法协定删除了这一条款，法国居民只能根据其实际在中国缴纳的税额在法国进行税收抵免。但这一规定有一定的过渡期，对于新中法协定生效起24个月内收到的特许权费用仍然可以适用税收饶让优惠。
• 此外，该饶让优惠可以继续适用于2013年1月日前交付并满足其他条件的设备租赁合同。

新中德双边税收协议 （2014年3月28日）

1.  调整常设机构的相关条款

• 建筑工地，建筑，装配或暗中工程的活动构成常设机构的期间从6个月延长到12个月
• 构成服务型常设机构的期限从任何连续12个月或累计超过6个月更改为183天，使用天数计算能更有效的避免对使用月为计算单位的不同理解，使判定更为清晰和便捷。
• 参考联合国税收协定范本的条款，对独立代理人的试用范围做出进一步限制。新中德协定规定，如果代理人活动全部或几乎全部代表某一企业，且该企业和代理人之间的交易不符合独立交易原则，该代理人就不可视为具有独立地位的代理人。

2.  进一步明确国际运输业务的范围

• 新中德税收协定澄清，以船舶或飞机经营国际运输业务取得的收入包括以光租形式出租的船舶或飞机，以及使用集装箱取得的相关收入（前提是这些经营项目应属于国际运输活动的附属项目）。上述业务取得的收入应仅在居民国征税，但应注意的是，税务总局在之前发布的对中国和新加坡税收协定条文解释中已明确，判断附属业务的标准时该业务收入不应超过年度总收入的10%。

3.  降低预提所得税税率

• 企业从其直接持有不低于25%股份的公司获取股息时，如果企业是该股息的受益所有人，则该股息的来源国的预提所得税税率从10%降到5%。但是，若该股息是源于投资工具直接或间接投资不动产所得，那么在特定的情况下，相关股息的预提所得税的限制税率则提高到15%，然而，这一变化不会影响德国居民企业从中国获得的股息，因为适用的税率仍是中国国内税法规定的10%。
• 利息的预提所得税率仍然是10%。但是，根据新中德协定，支付给中国国有商业银行的利息不再享受在德国免税的待遇。
• 租赁设备的特许权适用费税率由7%降到6%。

4.  修订财产收益条款

• 新中德协定下，如果德国居民转让其持有的中国公司的股份，只有在出现以下两种情况下，中国才有征税权：1， 转让财产主要由不动产构成的公司的股份，或2，转让方在转让行为前的12个月内，曾经直接或间接拥有被转让公司至少25%的股份。
• 此外，值得注意的是，根据新中德协定，如果在认可的证券交易市场转让上市公司的股票，只要转让方当年所转让股票的总额不超过上市股票的3%，而且该公司不是前文提到的财产主要由不动产构成的公司，该交易则无需再来源国缴纳所得税。

5.  新增防止滥用税收协定条款

• 新中德协定增加了防止滥用协定的条款防范以获取税收协定优惠为主要目的的安排或交易，并允许两国适用各自的国内法打击滥用税收协定的行为。

6.  取消税收饶让优惠

• 1985年版协定条款对税收饶让的规定是，德国税收居民就利息，特许权使用费在中国缴纳的税款，无论是否实际缴纳，都允许其按照视同15%的税率在德国进行超额抵免。但是，新中德协定取消了这一优惠，德国居民只能根据其实际缴纳的税额进行税收抵免。