Treaty benefit limitation: majority foreign-owned resident companies may be denied passive income benefits unless substantive operations or authority approval. The protocol bars treaty relief for dividends, interest, royalties and capital gains where a resident company's share capital is predominantly held by non-residents, except where the company carries on substantive business operations beyond mere holding; competent authorities may nonetheless grant benefits under the mutual agreement procedure if the company's establishment and conduct are based on sound business reasons and not primarily to obtain treaty advantages.
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.
Treaty benefit limitation: majority foreign-owned resident companies may be denied passive income benefits unless substantive operations or authority approval.
The protocol bars treaty relief for dividends, interest, royalties and capital gains where a resident company's share capital is predominantly held by non-residents, except where the company carries on substantive business operations beyond mere holding; competent authorities may nonetheless grant benefits under the mutual agreement procedure if the company's establishment and conduct are based on sound business reasons and not primarily to obtain treaty advantages.
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