Interest taxation: source-state withholding limited where beneficial owner is resident; PE-connected interest follows business profit rules. 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 but with limited withholding where the beneficial owner is resident. Withholding is capped at 10 per cent for loans from bona fide banks or similar financial institutions and at 15 per cent in other cases. The Article treats interest broadly, excludes late-payment penalties, exempts interest effectively connected with a permanent establishment or fixed base (governed by business profits or independent services rules), and requires arm's-length adjustment where special relationships inflate interest.
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 withholding limited where beneficial owner is resident; PE-connected interest follows business profit rules.
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 but with limited withholding where the beneficial owner is resident. Withholding is capped at 10 per cent for loans from bona fide banks or similar financial institutions and at 15 per cent in other cases. The Article treats interest broadly, excludes late-payment penalties, exempts interest effectively connected with a permanent establishment or fixed base (governed by business profits or independent services rules), and requires arm's-length adjustment where special relationships inflate interest.
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