Taxation of royalties and technical service fees: source state taxation permitted, limited withholding where recipient is beneficial owner. Article 12 permits both source and resident States to tax royalties and fees for technical services paid to a resident of the other State, but where the recipient is the beneficial owner the source State's tax is limited by a withholding cap and the competent authorities shall agree the mode of its application. The Article defines royalties and fees for technical services, enumerates exclusions, treats payments connected to a permanent establishment or fixed base as taxable under business profits or independent personal services provisions, and requires arm's length adjustment where related party relationships distort 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 service fees: source state taxation permitted, limited withholding where recipient is beneficial owner.
Article 12 permits both source and resident States to tax royalties and fees for technical services paid to a resident of the other State, but where the recipient is the beneficial owner the source State's tax is limited by a withholding cap and the competent authorities shall agree the mode of its application. The Article defines royalties and fees for technical services, enumerates exclusions, treats payments connected to a permanent establishment or fixed base as taxable under business profits or independent personal services provisions, and requires arm's length adjustment where related party relationships distort amounts.
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