Article 12 - Royalties and fees for technical services

Royalties and technical service fees: source State taxation limited where recipient is beneficial owner, with connected permanent establishment rules.

Article 12 permits taxation of royalties and fees for technical services in both the recipient's State of residence and the source State, but caps source State tax at ten percent where the recipient is the beneficial owner. The Article defines royalties and fees for technical services, lists specific exclusions from the latter, excludes application where amounts are effectively connected with a permanent establishment or fixed base (in which case business profit or independent services rules apply), contains a deemed source rule based on the payer or permanent establishment, and limits treaty relief to arm's length amounts where related party relationships inflate payments.