Royalties and technical service fees: source State may tax, residence State taxation limited for beneficial owners.

Article 12 provides that royalties and fees for technical services arising in one Contracting State and paid to a resident of the other may be taxed in the residence State, while the source State may also tax them under its laws subject to a maximum withholding rate when the beneficial owner is resident of the other State. The Article defines the scope of royalties and fees for technical services, excludes payments effectively connected with a permanent establishment or fixed base from its provisions, deems when such payments arise for source allocation, and requires arm's-length adjustment where special relationships inflate amounts.

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