On March 2, 2011, Germany and Spain signed a new Double Tax Treaty. Once in force, the treaty will replace the Double Tax Treaty of December 2, 1966. A major change is the reduction of withholding tax on dividends from 10 % to 5 % in case the benefi cial owner is a company which holds directly at least 10 % of the capital of the company paying the dividends. The WHT on interest and royalties is reduced to nil. Furthermore, the treaty introduces an extended exchange of information clause developed by the OECD in order to eliminate harmful tax competition.