DA ITAD BIR Ruling No. 167-06

December 18, 2006 DA ITAD BIR RULING NO. 167-06 Article 20, Philippines-Germany tax treaty; BIR Ruling No. DA-ITAD-85-05; 30-06 European International School No. 75 Swaziland Street Better Living Subdivision Paraaque City Attention: Mr. Ludwig Etzel Administrator Deutsche Schule Manila Gentlemen : This refers to your letter dated September 11, 2005, applying for tax treaty relief on the salaries and/or other emoluments received by Mr. Walter Jrg Dietze, a teacher engaged to teach in Deutsche Schule Manila (DSM) for a period of not exceeding two (2) years, 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 Subdivision, Paraaque City; that Mr. Walter Jorg Dietze is, at present or immediately before, a resident of the Federal Republic of Germany as evidenced by the Certification letter issued by Mr. Markus Tschan, Third Secretary, Press and Cultural Affairs of the Embassy of the Federal Republic of Germany in Manila; that DSM entered into a Contract of Employment for Limited Period of Time with Mr. Dietze from August 1, 2006 to July 31, 2008. 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." HCITcA Based on the aforequoted provision, it is clear that the remuneration paid to a teacher who, is or immediately before his visit to the Philippines, a resident of Germany and who stays 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. Walter Jorg Dietze 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 30-06 dated March 16, 2006) cda2007tax 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