Royalties and technical service fees: cross border taxation limited and tied to connection to permanent establishments or fixed bases.

Article 12 permits taxation of royalties and fees for technical services in the State of residence and in the State where they arise, with a specified maximum withholding when the beneficial owner is resident in the other Contracting State. It defines royalties and fees for technical services, excludes aircraft and ships from royalties under Article 8, and provides that the withholding rules do not apply when the beneficial owner has a permanent establishment or fixed base in the source State and the payments are effectively connected. Related party excess payments are limited to the arm's length portion for treaty relief; excess remains taxable under domestic law.

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