Bilateral Agreements Between Germany and Singapore

Are you a German company looking use Singapore as a hub to access the ASEAN market? Read on to learn more about the benefits of bilateral agreements between Germany and Singapore.

Free Trade Agreement (FTA)

The reduction of tariff and non-tariff barriers under the EU-Singapore Free Trade Agreement (FTA) provides Singapore companies with greater market access to all EU member states. It also contains rules on trade and sustainable development, including the protection of labour rights and the environment.

Key benefits for Singapore companies include: 

  • The EU have removed tariffs on 84% of all Singapore products entering the EU within the first year, and the remaining 16% over a period of 3 to 5 years
  • Unnecessary technical barriers to trade (TBT) for Singapore and EU exporters which sometimes makes it difficult for companies to sell their products in different markets have been removed. A wide range of sectors in both the EU and Singapore will benefit, such as electronics, motor vehicles and vehicle parts, pharmaceuticals, renewable energy, as well as meat and meat products
  •  Enhanced market access for service providers, professionals, and investors, which creates a level-playing field for businesses in each other’s markets, including through certain sectors specific rules on non-discrimination and transparency

Double Tax Avoidance Agreement (DTA)

The Singapore-Germany Double Tax Avoidance Agreement (DTA) provides relief from double taxation on Income and on Capital to promote mutual economic relations between the two countries.

The treaty applies to Singapore and German residents, as well as to companies registered in one of the two jurisdictions and conducting business activities in the other.

For Singapore and German companies, tax residency is also determined depending on the place of overall management of the company.

The DTA covers, among others, the taxation of Business profits, dividends, interests, and royalties.

As regards to the tax treatment under the Germany-Singapore Double Taxation Treaty, business profits which are not attributable to a Permanent establishment (PE) situated in the Country where the services are performed should not be taxable.

The DTA also clarified the term “permanent establishment” as a set place of business for the regulated entities. The definition of PE includes, branch offices, places of management, offices, construction sites, factories, and projects that lasts more than 6 months.

With regards to dividends, interests and royalties, tax treatment varies from complete to partial exemption.

More specifically, no withholding tax is imposed on dividends paid in Singapore and a withholding of 8% is charged on the gross amount of the interest paid and the gross amount of royalties paid abroad.

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At Hawksford, we can help you meet with you Accounting and Tax requirements, so you can focus on growing your business. Depending on your company’s needs, Hawksford can partner with you as your bookkeeper, accountant, controller, business advisor, part-time CFO — or the entire Accounting and Finance department.

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Investment Guarantee Agreements

The Germany-Singapore Bilateral Investment Treaty (BIT) is a legally binding agreement between Germany and Singapore. It establishes rules on how Germany should treat investments and investors from Singapore and vice-versa. With the BIT, Singapore companies operating in Germany will enjoy protection on their investments, on top of the protection accorded under Germany’s domestic laws. Similarly, German companies operating in Singapore will also enjoy investment protection.

The BIT will grant investors from both countries the following key areas of protection:

  • Non-discriminatory treatment compared to other foreign or local investors. (Most-Favoured-Nation treatment)
  • Provided prompt, adequate, and effective compensation in the event of nationalisation.
  • Right for investors to submit dispute claims on behalf of their locally established enterprise in the host state.
  • Access to internal arbitration for investment disputes.
  • Freedom to transfer capital and returns.

    Looking to set up a company in Singapore?

If you are looking to leverage on the bilateral agreements between Germany and Singapore and expand your business operations into Singapore, Hawksford can help. We have a dedicated German speaking team to help you navigate the local business landscape and seamlessly expand your business operations into Singapore 

Source: Enterprise Singapore
This article is intended for general information only and is not intended to apply to any specific situations or to constitute legal advice.

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