Interest withholding limitation capped for beneficial owners; exemptions and permanent establishment connections determine taxable treatment. Interest arising in one Contracting State and paid to a resident of the other may be taxed in the recipient's State, but the source State may also tax such interest subject to a withholding limitation where the recipient is the beneficial owner. Exemptions apply for interest beneficially owned by governments, specified public financial institutions, or mutually agreed entities. Interest connected with a permanent establishment or fixed base is taxable under the business profits or independent personal services provisions, and amounts exceeding arm's length interest due to special relationships are disregarded for treaty relief.
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 withholding limitation capped for beneficial owners; exemptions and permanent establishment connections determine taxable treatment.
Interest arising in one Contracting State and paid to a resident of the other may be taxed in the recipient's State, but the source State may also tax such interest subject to a withholding limitation where the recipient is the beneficial owner. Exemptions apply for interest beneficially owned by governments, specified public financial institutions, or mutually agreed entities. Interest connected with a permanent establishment or fixed base is taxable under the business profits or independent personal services provisions, and amounts exceeding arm's length interest due to special relationships are disregarded for treaty relief.
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