Cross-border interest taxation limits withholding when recipient is beneficial owner, with exemptions for governments and central banks. Interest may be taxed in the recipient's State of residence but may also be taxed in the source State subject to a withholding tax limitation where the recipient is the beneficial owner; competent authorities shall agree the mode of application. Exemptions apply for the Government, political sub divisions, local authorities, the Central Bank and mutually agreed governmental banks or financial agencies. Interest is income from debt claims, excludes penalty charges for late payment, is deemed to arise where the payer is resident or where a permanent establishment bears the indebtedness, and amounts exceeding arm's length terms remain taxable under domestic law.
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Cross-border interest taxation limits withholding when recipient is beneficial owner, with exemptions for governments and central banks.
Interest may be taxed in the recipient's State of residence but may also be taxed in the source State subject to a withholding tax limitation where the recipient is the beneficial owner; competent authorities shall agree the mode of application. Exemptions apply for the Government, political sub divisions, local authorities, the Central Bank and mutually agreed governmental banks or financial agencies. Interest is income from debt claims, excludes penalty charges for late payment, is deemed to arise where the payer is resident or where a permanent establishment bears the indebtedness, and amounts exceeding arm's length terms remain taxable under domestic law.
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