Interest taxation: source state may tax interest paid to nonresidents; withholding limited by treaty; exemptions for governments and central banks. Interest paid to a resident of the other Contracting State may be taxed in the recipient's State, while the source State may also tax such interest subject to a treaty withholding tax cap where the recipient is the beneficial owner. Interest is exempt in the source State if derived and beneficially owned by the other State's Government, Central Bank, or agreed governmental financial institutions. The Article defines interest broadly, excludes late-payment penalties, treats interest as arising with the payer or a connected permanent establishment, and limits treaty relief where special relationships inflate interest beyond 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.
Interest taxation: source state may tax interest paid to nonresidents; withholding limited by treaty; exemptions for governments and central banks.
Interest paid to a resident of the other Contracting State may be taxed in the recipient's State, while the source State may also tax such interest subject to a treaty withholding tax cap where the recipient is the beneficial owner. Interest is exempt in the source State if derived and beneficially owned by the other State's Government, Central Bank, or agreed governmental financial institutions. The Article defines interest broadly, excludes late-payment penalties, treats interest as arising with the payer or a connected permanent establishment, and limits treaty relief where special relationships inflate interest beyond arm's-length amounts.
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