Royalties and technical service fees: source state taxation permitted but limited by treaty when recipient is resident.

Royalties and fees for technical services arising in one Contracting State may be taxed in the recipient's State, while the source State may also tax them subject to a treaty limited rate where the beneficial owner is resident in the other State. Definitions distinguish royalties (use or right to use intellectual property, equipment or information) from fees for technical services (managerial, technical or consultancy services including personnel). If the beneficial owner has a permanent establishment or fixed base in the source State and the payments are effectively connected with it, articles on business profits or independent personal services apply. Special relationship adjustments limit treaty relief to the arm's length amount.

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