Royalties tax allocation under DTAA: residence-state primary right with connected-person and permanent-establishment exceptions. Article 12 allocates primary taxation of royalties to the residence State of the beneficial owner, defines royalties broadly to include payments for use of intellectual property and technical information, and deems royalties to arise where the use occurs. Exceptions permit source-State taxation where the beneficial owner is a connected person benefiting from a special tax regime, where expatriated-entity rules apply to royalties paid to connected companies, and where royalties are effectively connected with a permanent establishment, in which case Article 7 applies. Arm's-length adjustments limit Treaty relief for amounts exceeding market value.
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.
Royalties tax allocation under DTAA: residence-state primary right with connected-person and permanent-establishment exceptions.
Article 12 allocates primary taxation of royalties to the residence State of the beneficial owner, defines royalties broadly to include payments for use of intellectual property and technical information, and deems royalties to arise where the use occurs. Exceptions permit source-State taxation where the beneficial owner is a connected person benefiting from a special tax regime, where expatriated-entity rules apply to royalties paid to connected companies, and where royalties are effectively connected with a permanent establishment, in which case Article 7 applies. Arm's-length adjustments limit Treaty relief for amounts exceeding market value.
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