AGREEMENT BETWEEN THE AZERBAIJAN REPUBLIC AND FEDERAL REPUBLIC OF GERMANY

of August 25, 2004

About avoidance of double taxation and prevention of tax avoidance on the income and property

The Azerbaijan Republic and the Federal Republic of Germany for the purpose of development and strengthening of economic relations by elimination of tax obstacles, agreed as follows:

Article 1. Persons to whom the Agreement is applied

This agreement is applied to persons who are residents of one or both Contracting States.

Article 2. Taxes to which the Agreement extends

1. This agreement, irrespective of method and method of the taxation, is applied to taxes on the income and on property, the collectable Contracting State, one of its lands or its administrative and territorial units.

2. All taxes levied from the total amount of the income, total cost of property or from separate elements of the income or property including taxes on the income from alienation of personal or real estate, taxes levied from the total amount of the salary or salary paid by the companies and also the taxes levied from the income from property increase in value belong to taxes on the income and on property.

3. The agreement, in particular, extends to the following taxes operating now:

a) in the Azerbaijan Republic:

income tax of legal entities;

income tax;

the property tax and the land tax (further the referred to as "Azerbaijani taxes");

a) in the Federal Republic of Germany:

income tax; tax on corporations; tax on business activity and the property tax, including amendments to them (further the referred to as "German taxes");

4. This agreement is applied also to identical or in essence to similar taxes which will be levied in addition to the existing taxes or instead of them after signature date of this agreement. Competent authorities of Contracting States will notify each other at the end of every year on any essential changes which will be made to their tax legislations.

Article 3. General concepts

1. For the purposes of this agreement the following terms are applied if other sense is not provided in context:

a) the term "Azerbaijan" - means the territory of the Azerbaijan Republic (including territorial waters, the sector of the Caspian Sea (lake), including territorial waters and airspace, bowels of the earth, seabed and natural resources of the Azerbaijan Republic to which the sovereign rights or jurisdiction of the Azerbaijan Republic, and also any other territory established are applied and which can be established in the future according to international law and the national legal system of the Azerbaijan Republic;

b) the term "the Federal Republic of Germany" - means the Federal Republic of Germany and also according to international law and the national legal system the territory the Federal Republic of Germany the seabed, bowels of the earth and natural resources, and also sheet of water over them connected with the territorial sea where the Federal Republic of Germany performs investigation, development, protection of live and lifeless natural resources, and also the sovereign rights and jurisdiction for the purpose of management by them;

c) the terms "Contracting State" and "other Contracting State" - mean the Azerbaijan Republic or the Federal Republic of Germany depending on context;

d) the term "person" - means physical person, the company or any other consolidation of persons;

e) "company" - means the term any legal entity or any other person of law who are considered as the legal entity for the purposes of the taxation;

f) the terms "company of the Contracting State" and "company of other Contracting State" - mean, respectively, the company managed by resident of the Contracting State and the company managed by resident of other Contracting State;

g) the term "international carriages" - means all transportations sea or the aircraft, performed by the company which is resident of the Contracting State except cases when sea or the aircraft is operated only between Items of other Contracting State;

h) the term "national person" means:

aa) in the Azerbaijan Republic:

any physical person who is the citizen of the Azerbaijan Republic, and also any legal entity founded according to the current legislation of the Azerbaijan Republic, partnership or any other consolidation of persons; ee) in the Federal Republic of Germany:

any German, in value, the implied Fundamental Law of the Federal Republic of Germany, and also any legal entity founded according to the current legislation to the Federal Republic of Germany, partnership or any other consolidation of persons;

i) the term means "competent authority":

(aa) in the Azerbaijan Republic - Ministry of Finance and Ministry of Taxes;

(bb) in the Federal Republic of Germany - the Federal Ministry of Finance or the body authorized by it.

2. At any time in case of application of this agreement by the Contracting State if other sense, any term which is not determined in it is not provided in context will have that value which is provided specified in the legislation of this State concerning taxes to which it is applied Agreements, and any sense corresponding to the tax legislation of this State will have advantage over the sense provided in other laws of this State.

Article 4. Resident

1. For the purposes of this agreement the term "resident of the Contracting State" means person who by the legislation of this Contracting State is subject to the taxation in it based on its residence, the permanent residence, place of registration, the governing body location, or other similar criteria, and also this State, its administrative and territorial units or municipal authorities. This term, at the same time, does not include person who is subject to the taxation in this State only based on the fact that this person gains income from sources in this State or from the property located in this State.

2. In case according to provisions of Item 1 of this Article the physical person is resident of both Contracting States, the following provisions are applied:

a) the face is considered resident only of that Contracting State in which it has the permanent dwelling. If it has the permanent dwelling in both Contracting States, it is considered resident of that Contracting State in which has more close personal and commercial relations (the center of vital interests);

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