Royalties and technical service fees: treaty permits source taxation with capped withholding and PE connection exceptions.

Article 12 permits taxation of royalties and fees for technical services by the recipient's State and allows source State taxation with a capped withholding where the recipient is the beneficial owner. It defines royalties and fees for technical services, excludes payments effectively connected with a permanent establishment or fixed base-where business profits or independent personal services provisions apply-and deems source of payments based on payer status or connection to a permanent establishment. Special-relationship adjustments restrict treaty application to arm's-length amounts, with excess taxable under domestic law.

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