Taxation of royalties and technical service fees: source and residence rules, connection to permanent establishment, and arm's length limit.

Royalties and technical service fees may be taxed in the recipient's residence State, while the source State may also tax them subject to a treaty ceiling when the beneficial owner is a resident of the other Contracting State. Definitions specify categories of royalties and technical services. Royalties/fees connected with a permanent establishment or fixed base are taxed under business profits or independent personal services rules. Where a special relationship inflates payments, only the arm's length amount is governed by the treaty; any excess is taxable under domestic law.

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