Withholding on cross-border interest limited by treaty; exemptions for governments, central banks, and approved residents. Cross-border interest payments may be taxed in the recipient's State and also in the State where the interest arises subject to a treaty withholding cap when the recipient is the beneficial owner. Interest is broadly defined as income from debt-claims, with exemptions for governments, central banks and other approved financial institutions, and further approval-based exemptions for certain resident persons. If the beneficial owner has a permanent establishment or fixed base in the source State and the debt-claim is effectively connected, business profits or independent personal services rules apply. Related-party excess interest is limited to an arm's-length amount.
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 on cross-border interest limited by treaty; exemptions for governments, central banks, and approved residents.
Cross-border interest payments may be taxed in the recipient's State and also in the State where the interest arises subject to a treaty withholding cap when the recipient is the beneficial owner. Interest is broadly defined as income from debt-claims, with exemptions for governments, central banks and other approved financial institutions, and further approval-based exemptions for certain resident persons. If the beneficial owner has a permanent establishment or fixed base in the source State and the debt-claim is effectively connected, business profits or independent personal services rules apply. Related-party excess interest is limited to an arm's-length amount.
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