Interest withholding tax caps limit source-state taxation; reduced cap for bank loans and higher cap for other lenders. Interest may be taxed in the recipient State, but the source State may also impose withholding tax subject to caps where the recipient is the beneficial ... Summary
Interest withholding tax caps limit source-state taxation; reduced cap for bank loans and higher cap for other lenders.
Interest may be taxed in the recipient State, but the source State may also impose withholding tax subject to caps where the recipient is the beneficial owner; exemptions apply for Governments, central banks and certain export-import banks. The Article treats income from all debt-claims as interest, excludes withholding treatment when interest is effectively connected with a permanent establishment, and requires arm's-length adjustment where related-party relationships inflate interest payments.
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