Interest taxation limits: source state may tax interest but reduced withholding applies when recipient is beneficial owner. Article 12 allocates taxing rights over interest: interest arising in one Contracting State and paid to a resident of the other may be taxed in the recipient's State, but the source State may also tax it subject to a reduced withholding ceiling when the recipient is the beneficial owner. Exemptions apply for interest beneficially owned by governments, central banks, specified export finance institutions or approved loans tied to export/import financing. Interest connected with a permanent establishment or fixed base is taxed under business or independent personal services rules. The Article defines interest broadly as income from debt claims and provides an arm's length adjustment where special relationships inflate interest amounts.
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.
Interest taxation limits: source state may tax interest but reduced withholding applies when recipient is beneficial owner.
Article 12 allocates taxing rights over interest: interest arising in one Contracting State and paid to a resident of the other may be taxed in the recipient's State, but the source State may also tax it subject to a reduced withholding ceiling when the recipient is the beneficial owner. Exemptions apply for interest beneficially owned by governments, central banks, specified export finance institutions or approved loans tied to export/import financing. Interest connected with a permanent establishment or fixed base is taxed under business or independent personal services rules. The Article defines interest broadly as income from debt claims and provides an arm's length adjustment where special relationships inflate interest amounts.
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