Interest taxation permits source-state taxation with capped withholding for beneficial owners; exemptions and permanent establishment exceptions apply. Interest paid to a resident of the other Contracting State may be taxed in the recipient's State, and may also be taxed in the State of source subject to a limited withholding when the recipient is the beneficial owner. Specific institutional exemptions from source taxation are provided. 'Interest' is defined broadly; interest is treated as arising where the payer is a State, political subdivision, local authority or resident, or where a permanent establishment or fixed base bears the indebtedness. Special-relationship adjustments apply and effective-connection to a permanent establishment displaces the Article in favour of business or professional income rules.
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Provisions expressly mentioned in the judgment/order text.
Interest taxation permits source-state taxation with capped withholding for beneficial owners; exemptions and permanent establishment exceptions apply.
Interest paid to a resident of the other Contracting State may be taxed in the recipient's State, and may also be taxed in the State of source subject to a limited withholding when the recipient is the beneficial owner. Specific institutional exemptions from source taxation are provided. "Interest" is defined broadly; interest is treated as arising where the payer is a State, political subdivision, local authority or resident, or where a permanent establishment or fixed base bears the indebtedness. Special-relationship adjustments apply and effective-connection to a permanent establishment displaces the Article in favour of business or professional income rules.
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