Taxation of interest: source and residence States share taxing rights, with treaty limits and PE exceptions applying. Interest arising in one Contracting State and paid to a resident of the other may be taxed by the residence State, while the source State may also tax the interest subject to a treaty limit when the beneficial owner is resident in the other State. The Article defines interest broadly as income from debt-claims and excludes amounts treated as dividends under Article 10. Interest effectively connected with a permanent establishment or fixed base is taxed under the rules for business profits or independent personal services, and where a special relationship inflates interest, treaty relief applies only to the arm's length portion.
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.
Taxation of interest: source and residence States share taxing rights, with treaty limits and PE exceptions applying.
Interest arising in one Contracting State and paid to a resident of the other may be taxed by the residence State, while the source State may also tax the interest subject to a treaty limit when the beneficial owner is resident in the other State. The Article defines interest broadly as income from debt-claims and excludes amounts treated as dividends under Article 10. Interest effectively connected with a permanent establishment or fixed base is taxed under the rules for business profits or independent personal services, and where a special relationship inflates interest, treaty relief applies only to the arm's length portion.
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