DA ITAD BIR Ruling No. 044-07

April 4, 2007 DA ITAD BIR RULING NO. 044-07 Article 20, Philippines-Germany Tax Treaty; BIR Ruling No. DA-ITAD-114-06; DA-ITAD-44-07 European International School Ecole Francaise de Manille 75 Swaziland St., Better Living Subdivision 1711 Paraaque City Attention: Ludwig Etzel Administrator European International School-Germany Gentlemen : This refers to your letter dated September 11, 2006, requesting for a Certificate of Tax Exemption for Ms. MARA CONRAD (Ms. Conrad), as a visiting teaching staff in the Philippines, pursuant to Article 20 of the Philippines-Germany tax treaty. It is represented that Ms. CONRAD was, immediately before her employment in the Philippines, a resident of Germany; that the European International School (Ecole Francaise de Manille) (hereinafter referred to as EIS-EFM) and Ms. CONRAD entered into a Contract of Employment whereby Ms. CONRAD is engaged to teach at EIS-EFM for the Deutsche Schule Manila for the school year 2006-2008 from August 1, 2006 to July 31, 2008; that the employment ends on July 31, 2008 without requiring a resignation or further notice from EIS-EFM; and that in consideration of Ms. CONRAD's services, she shall receive a monthly salary and will receive a 13th month pay in December. TaCSAD In reply, please be informed that Article 20 of the Philippines-Germany tax treaty provides as follows: "Article 20 TEACHERS AND RESEARCHERS 1. Remuneration which a professor or teacher, who is or immediately before was a resident of a Contracting State and who visits the other Contracting State for a period not exceeding two years for the purpose of carrying out advanced study or research or for teaching at a university, college, school or other educational institution, receives for such work shall not be taxed in that Contracting State. 2. This Article shall not apply to income from research if such research is undertaken not in the general interest but primarily for the private benefit of a specific person or persons." Based on the aforequoted provision, it is clear that the remuneration paid to teachers who are residents of Germany and who stay in the Philippines for the purpose of teaching for a period not exceeding two (2) years shall not be subject to Philippine income tax. Such being the case, this Office is of the opinion and so holds that the subject remuneration of Ms. CONRAD for teaching in EIS-EFM for a period not exceeding two (2) years, more particularly from August 1, 2006 to July 31, 2008, shall not be subject to Philippine income tax pursuant to Article 20 of the Philippines-Germany tax treaty. (BIR Ruling No. DA-ITAD-114-06 dated September 27, 2006) AEaSTC This ruling is issued on the basis of the foregoing facts as represented. However, if upon investigation it shall be disclosed or discovered that the actual facts are different, then this ruling shall be without force and effect insofar as the herein parties are concerned. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service