The US-Germany income tax treaty

By Brent Chudoba, editor Updated September 15, 2026

Under the US-Germany income tax treaty, the most the paying country can withhold from an ordinary investor is 15% on dividends, 0% on interest and 0% on royalties. Some recipients and some kinds of payment get a different rate, and the table below lists each one. Without a treaty, US-source dividends and royalties paid to a nonresident are withheld at 30%, while the tax code already exempts most portfolio and bank-deposit interest whether or not a treaty applies.

The treaty has generally applied since 1990, and IRS lists its most recent protocol as taking effect in 2008. It also decides residency when both countries claim you, and assigns who taxes pensions and Social Security. It does not generally stop the US taxing its own citizens.

What are the US-Germany treaty withholding rates?

US-Germany treaty withholding rates and who qualifies
Income	Rate cap	Who gets this rate, and where the treaty says so
Dividends	15%	Anyone not in a category below, including an ordinary individual investor (Article 10(2)(b))
Dividends	5%	a company that directly owns at least 10% of the voting stock of the company paying the dividend (not available on dividends from a US RIC or REIT or a German Investmentvermögen) (Article 10(2)(a))
Dividends	0%	a company resident in the other country that has directly owned shares carrying at least 80% of the voting power of the paying company for the 12 months ending on the date entitlement to the dividend is determined, and that also passes one of the limitation-on-benefits routes listed in 10(3)(a): the listed-company tests of Article 28(2)(c), the ownership and base-erosion test of 28(2)(f) together with the active-business test of 28(4), the derivative-benefits test of 28(3), or a competent authority determination under 28(7) (not available on dividends from a US RIC or REIT or a German Investmentvermögen) (Article 10(3)(a))
Dividends	0%	a pension fund resident in the other country, as defined in 10(11), on dividends not derived from a business the fund carries on directly or indirectly; Protocol paragraph 8(a) withdraws this rate if Germany introduces a tax exemption for real estate investment companies (see note) (Article 10(3)(b))
Interest	0%	Everyone, including an ordinary individual investor (Article 11(1))
Royalties	0%	Everyone, including an ordinary individual investor (Article 12(1))

The cap applies to income paid from one country to a resident of the other, and each treaty conditions it on that resident being the real recipient rather than a conduit; the article cited beside each rate is the one that sets the condition. Which document sets each rate today: dividends, 2006 Protocol, Article IV, which replaced Article 10 in full; interest, 1989 Convention; the 2006 Protocol kept the 0% rate, added paragraph 6 (Article V) and removed fixed-base wording from paragraphs 3 and 5 (Article VII); royalties, 1989 Convention; the 2006 Protocol (Article VII(4)) only removed fixed-base wording from paragraph 3.

What else changes the rate?

These are edge cases. If you hold ordinary shares, bonds or a copyright, skip to the next section.

Dividends: Dividends from a US RIC or a German Investmentvermögen never get the 5% rate or the 80% parent 0% rate; the 15% rate applies, or 0% for a qualifying pension fund (10(4)). A US REIT dividend gets the 15% rate only if the owner is an individual holding not more than 10% of the REIT, a person holding not more than 5% of a publicly traded class, or a person holding not more than 10% of a diversified REIT; otherwise the treaty does not cap it (10(4)). Income from profit-sharing arrangements that the payer deducts (German silent partnerships, participating loans, Gewinnobligationen and jouissance rights, and US contingent interest that is not portfolio interest) may be taxed where it arises under that country's own law (10(6)). Shares held through a permanent establishment in the paying country are taxed as business profits instead (10(7)). Branch profits tax is capped at 5% and not charged at all on companies meeting the tests in 10(10). The 1989 text gave US portfolio investors an extra 5 point reduction on German dividends while Germany's corporate tax credit system lasted (old 10(3)); the 2006 Protocol deleted it, so the portfolio rate is 15% in both directions. Protocol paragraph 8(a) says the pension fund 0% rate in 10(3)(b) shall not apply if Germany introduces a tax-exempt regime for real estate investment companies; Treasury's 2007 technical explanation reads this as reaching only dividends paid by such a German company, and IRS Table 1 (May 2023) still lists the pension fund exemption for US-source dividends. Under Protocol paragraph 8(b), Germany applies the pension fund rate to the person treated as owning pension fund assets under section 39 of its Fiscal Code, if the dividends can only fund retirement benefits.

Interest: Interest is taxable only in the country where the owner lives. Exceptions: profit-sharing interest that the payer deducts, including US contingent interest that is not portfolio interest, falls under 10(6) and may be taxed where it arises under that country's own law; an excess inclusion from a residual interest in a US REMIC may be taxed by the US under its own law (11(6)); and interest connected with a permanent establishment in the paying country is taxed as business profits (11(3)). Article 28(5) allows up to 15% where the income belongs to a permanent establishment in a third country and the combined tax paid is under 60% of what the home country would charge.

Royalties: Royalties are taxable only in the country where the owner lives, including gains from selling such rights that depend on their productivity or use (12(2)). Payments for films and works for radio or television broadcasting are outside the 12(2) definition. Under Protocol paragraph 11, a performer's royalties on a recording made in the other country fall under this Article. Royalties connected with a permanent establishment in the paying country are taxed as business profits (12(3)). Article 28(5) allows up to 15% where the income belongs to a permanent establishment in a third country and the combined tax paid is under 60% of what the home country would charge.

Which country are you a resident of under the US-Germany treaty?

If the US and Germany both treat you as a resident under their own laws, Article 4(2) decides. It works through these tests in order, and stops at the first one that points to a single country:

Where you have a permanent home available to you
If you have a permanent home in both countries, where your personal and economic ties are closer (your centre of vital interests)
If that centre cannot be determined, or you have no permanent home in either country, where you have a habitual abode
If you have a habitual abode in both countries or in neither, the country you are a national of
If you are a national of both countries or of neither, the two tax authorities settle it by mutual agreement

Using the tie-breaker to be treated as a resident of Germany has US consequences: you file Form 1040-NR with Form 8833 attached, and a green card holder of 8 of the last 15 years who makes the claim is treated as having ended US residency. The details are on the hub page.

How does the US-Germany treaty tax pensions and Social Security?

Pensions (Article 18(1)). A private pension or similar pay for past employment is taxable only in the country where the retiree lives (Treasury's 1989 explanation says this covers lump sums as well as periodic payments), and annuities follow the same rule under 18(2), but the saving clause lets the US still tax a US citizen living in Germany on a private pension. Government service pensions fall under Article 19(2) instead, and under 18A(1), which the US applies to its own citizens too, growth inside a pension plan in the other country is taxed only when paid out.

Social Security (Article 18(5)). Social security benefits and other public pensions (Treasury names US Tier 1 Railroad Retirement) paid by one country to a resident of the other are taxable only in the country where the recipient lives, which treats them as if they were its own social security benefits. Because 18(5) is an exception to the saving clause, a US citizen who is a resident of Germany under the treaty is taxed on US Social Security only by Germany.

Does the treaty stop the US taxing its own citizens?

Generally no. The saving clause (Article 1(4)) keeps that right. The US keeps the right to tax its citizens, and anyone who counts as a US resident under the treaty's own residence rules, as if the treaty did not apply, apart from the exceptions below. It may also tax a former citizen or long-term resident (a green card holder in at least 8 of the prior 15 tax years) under US law for ten years after that status ends.

The exceptions: Under 1(5)(a) the US still gives everyone, its citizens included, the benefits of 9(2), 13(6), 18(3) to 18(5) (alimony, child support and social security), 18A(1) and 18A(5) (pension plans), 19(3) (compensation for war or persecution injuries), and Articles 23, 24 and 25; under 1(5)(b) it gives 18A(2), 19(1)(b), Article 20 (visiting professors, students and trainees) and Article 30 only to people who are neither US citizens nor holders of US immigrant status.

What does the treaty say about students?

Article 20(2)-(5). A student or business apprentice from the other country here for full-time education or training is not taxed here on money from abroad for maintenance, education or training, grants from non-profit or comparable public bodies are exempt, students and grant recipients staying up to four years are exempt on up to $9,000 a year of job income that supplements those funds, and an employee from the other country here up to one year to gain work experience is exempt on pay from the home employer only if that pay is no more than $10,000 in total (above that, none of it is exempt). The US does not give these benefits to its own citizens or green card holders (1(5)(b)), and visiting professors and researchers have a separate two-year rule in 20(1).

What do people most often get wrong about this treaty?

The portfolio dividend rate is 15% in both directions; the 1989 text's extra 5 point cut on German dividends was deleted by the 2006 Protocol. The 0% dividend rate is for 80% owned corporate subsidiaries that pass limitation-on-benefits tests and for pension funds, never for individual investors. Social Security is taxed only where the recipient lives, even for a US citizen living in Germany, but the US can still tax a private pension paid to a US citizen living in Germany. Germany treats a US citizen or green card holder as a US resident only if that person has a substantial presence, permanent home or habitual abode in the US (Protocol paragraph 2(a)).

How do you claim the treaty rate?

Give the US payer Form W-8BEN naming Germany as your country of residence, before the payment. Many countries ask a US resident for Form 6166, a US residency certificate requested on Form 8802, before they apply the lower rate on their side. Both, with the fees and who can get them, are covered on US tax treaties by country.

Sources

Every rate and article on this page was read in the treaty text and its protocols, then checked a second time by a separate review of the same documents, on September 15, 2026.