German parliament approves Albania tax-treaty protocol

The vote concerned government bill 21/8244 and followed the Finance Committee’s recommendation in paper 21/8665. All parliamentary groups except the AfD voted for the bill; the Bundesrat had raised no objections in its first passage. Further German and Albanian ratification steps and an exchange of instruments remain necessary.^[1][2]

BEPS treaty changes

The protocol implements selected OECD/G20 BEPS treaty recommendations. It replaces the treaty preamble to state that the agreement should eliminate double taxation without creating opportunities for non-taxation or reduced taxation through evasion, avoidance or treaty shopping. It also replaces Article 29 with anti-abuse rules, including a principal-purpose test that can deny a treaty benefit where obtaining it was one of the main purposes of an arrangement unless granting the benefit accords with the relevant treaty provisions’ object and purpose.^[2]

Dividend and property-rich share rules

The protocol revises the 5% dividend-withholding ceiling for a corporate beneficial owner that directly holds at least 25% of the payer’s capital, adding a 365-day holding-period test that includes the payment date and disregards specified ownership changes caused directly by reorganisations. It also revises Article 13 so the source state may tax gains on shares or comparable interests that derived more than 50% of their value, at any time during the preceding 365 days, from immovable property there.^[2]

No application date yet

The protocol requires ratification and enters into force on the exchange of instruments. For withholding taxes it would apply to amounts paid from 1 January of the following calendar year; for other taxes it would apply to periods beginning on or after that date. Cross-border teams should continue using the existing treaty until entry into force is formally established, while reviewing affected ownership periods, property-rich entities and treaty-benefit structures.^[2]