Royalties and technical services: source-state may tax with a reduced withholding regime, but PE connection alters taxing rights.

Article 12 permits source-state taxation of royalties and fees for technical services but provides a reduced withholding rate when the recipient is the beneficial owner. It defines royalties and fees for technical services, excludes payments effectively connected to a permanent establishment or fixed base (bringing other Articles into play), deems source based on payer residence or connection to a permanent establishment or fixed base, and limits application to arm's-length amounts where special relationships inflate payments.

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