Withholding limitation on cross-border interest: source taxation constrained when beneficial owner is resident, with specified institutional exemptions. The treaty permits both the residence State of the beneficial owner and the source State to tax cross-border interest, but limits source State taxation when the beneficial owner is resident of the other Contracting State; interest arising in the source State is exempt if beneficially owned by governments, specified public financial institutions, or other agreed institutions. The Article defines interest broadly, deems interest to arise where the payer or the payer's permanent establishment is resident, disapplies the withholding limit when the interest is effectively connected to a permanent establishment or fixed base, and requires arm's-length adjustment where related-party relationships inflate interest.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Withholding limitation on cross-border interest: source taxation constrained when beneficial owner is resident, with specified institutional exemptions.
The treaty permits both the residence State of the beneficial owner and the source State to tax cross-border interest, but limits source State taxation when the beneficial owner is resident of the other Contracting State; interest arising in the source State is exempt if beneficially owned by governments, specified public financial institutions, or other agreed institutions. The Article defines interest broadly, deems interest to arise where the payer or the payer's permanent establishment is resident, disapplies the withholding limit when the interest is effectively connected to a permanent establishment or fixed base, and requires arm's-length adjustment where related-party relationships inflate interest.
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