Taxation of royalties and technical fees: source state may impose limited withholding; permanent establishment exception applies. Royalties and fees for technical services are taxable in the residence State of the recipient, while the source State may also tax them but with a prescribed limitation on tax where the recipient is the beneficial owner. Broad definitions of 'royalties' and 'fees for technical services' are provided. The limitation does not apply if the beneficial owner carries on business in the source State through a permanent establishment or performs independent personal services from a fixed base and the payments are effectively connected with that establishment or base. Special relationship adjustments limit treaty application to arm's length 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.
Taxation of royalties and technical fees: source state may impose limited withholding; permanent establishment exception applies.
Royalties and fees for technical services are taxable in the residence State of the recipient, while the source State may also tax them but with a prescribed limitation on tax where the recipient is the beneficial owner. Broad definitions of "royalties" and "fees for technical services" are provided. The limitation does not apply if the beneficial owner carries on business in the source State through a permanent establishment or performs independent personal services from a fixed base and the payments are effectively connected with that establishment or base. Special relationship adjustments limit treaty application to arm's length amounts.
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