Interest taxation cap limits cross-border withholding on interest payments; exemptions apply for government recipients and permanent establishments. Article 11 permits taxation of interest in the recipient State but allows the source State to tax interest paid to a resident of the other Contracting State subject to a withholding tax ceiling when the recipient is the beneficial owner. Interest is broadly defined to include income from debt-claims, securities and bonds. The withholding rules do not apply when the beneficial owner is effectively connected with a permanent establishment or fixed base in the source State, in which case rules on business profits or independent personal services govern. Special relationship adjustments limit treaty application to arm's-length interest 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 cap limits cross-border withholding on interest payments; exemptions apply for government recipients and permanent establishments.
Article 11 permits taxation of interest in the recipient State but allows the source State to tax interest paid to a resident of the other Contracting State subject to a withholding tax ceiling when the recipient is the beneficial owner. Interest is broadly defined to include income from debt-claims, securities and bonds. The withholding rules do not apply when the beneficial owner is effectively connected with a permanent establishment or fixed base in the source State, in which case rules on business profits or independent personal services govern. Special relationship adjustments limit treaty application to arm's-length interest amounts.
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