Royalties tax limitation: source state may tax but tax on beneficial owner capped, with PE exception. The DTAA permits both the residence and source State to tax royalties but caps source State tax at ten per cent of gross royalties when the recipient is the beneficial owner. Royalties are broadly defined to cover payments for copyrights, patents, trademarks, designs, equipment and technical information. If the beneficial owner carries on business in the source State through a permanent establishment and the royalties are effectively connected with that permanent establishment, Article 7 applies. Payments deemed to arise where the payer or a permanent establishment is situated, and special-relationship rules limit taxation to 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.
Royalties tax limitation: source state may tax but tax on beneficial owner capped, with PE exception.
The DTAA permits both the residence and source State to tax royalties but caps source State tax at ten per cent of gross royalties when the recipient is the beneficial owner. Royalties are broadly defined to cover payments for copyrights, patents, trademarks, designs, equipment and technical information. If the beneficial owner carries on business in the source State through a permanent establishment and the royalties are effectively connected with that permanent establishment, Article 7 applies. Payments deemed to arise where the payer or a permanent establishment is situated, and special-relationship rules limit taxation to arm's-length amounts.
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