DA ITAD BIR Ruling No. 114-06

September 27, 2006 DA ITAD BIR RULING NO. 114-06 Article 20, Philippines-Germany tax treaty; BIR Ruling No. DA-ITAD-85-05 European International School 75 Swaziland Street, Better Living Subdivision 1711 Paraaque City Metro Manila, Philippines Attention: Mr. Ludwig Etzel Administrator Deutsche Schule Manila Gentlemen : This refers to your letter dated February 7, 2000, requesting confirmation of your opinion that the salaries and/or other remunerations received by a teacher engaged to teach in Deutsche Schule Manila (German School Manila) (hereinafter, DSM) namely, Mr. Florian Rudolf Simmelbauer, for a period not exceeding two (2) years, are exempt from Philippine taxation pursuant to Article 20 of the Philippines-Germany tax treaty. It is represented that DSM is the German component of the European International School with principal address at No. 75 Swaziland St., Better Living, Subd., Paraaque City; that Mr. Florian Rudolf Simmelbauer was a resident of Germany before coming to the Philippines; that Mr. Florian Rudolf Simmelbauer is engaged to teach at the European International School for the Deutsche Schule Manila for the school year 2005-2008 from February 1, 2006 to January 31, 2008; and that his employment with the school ends on the 31st of January 2008 without requiring a written termination of contract of resignation and is renewable per agreement of both parties. In reply, please be informed that Article 20 (Teachers and Researchers) 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." DCSTAH Based on the aforequoted provision, it is clear that the remuneration paid to the teachers, who are or immediately before, were residents of Germany and who stay in the Philippines for the purpose of teaching for a period not exceeding two years shall not be subject to Philippine income tax. In view thereof, this Office is of the opinion and so holds that the subject remuneration of Mr. Florian Rudolf Simmelbauer for teaching in DSM for a period not exceeding two (2) years shall not be subject to Philippine income tax. ( BIR Ruling No. DA-ITAD-85-05 dated August 23, 2005 ) This ruling is issued on the basis of the facts as represented. However, if upon investigation it shall be disclosed 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