Taxation of royalties and technical service fees: resident beneficial owners face limited source state withholding; PE connection changes treatment. Cross border royalties and fees for technical services may be taxed in the recipient's State of residence but may also be taxed in the source State where they arise; when the beneficial owner is resident in the other Contracting State the source State's tax is limited to a prescribed maximum. 'Royalties' cover payments for use of or rights to intellectual property and proprietary information; 'fees for technical services' include managerial, technical, consultancy and personnel services. The Article excludes payments effectively connected with a permanent establishment or fixed base in the source State, in which case business profits or independent personal services provisions apply. Related party excess payments are reduced to arm's length amounts for the Article's application.
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.
Taxation of royalties and technical service fees: resident beneficial owners face limited source state withholding; PE connection changes treatment.
Cross border royalties and fees for technical services may be taxed in the recipient's State of residence but may also be taxed in the source State where they arise; when the beneficial owner is resident in the other Contracting State the source State's tax is limited to a prescribed maximum. "Royalties" cover payments for use of or rights to intellectual property and proprietary information; "fees for technical services" include managerial, technical, consultancy and personnel services. The Article excludes payments effectively connected with a permanent establishment or fixed base in the source State, in which case business profits or independent personal services provisions apply. Related party excess payments are reduced to arm's length amounts for the Article's application.
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