Interest taxation under the treaty: source-state withholding is limited for beneficial owners, with special exemptions and anti abuse rules. Article 12 permits taxation of interest in the recipient's State while allowing the source State to tax such interest subject to capped withholding when the recipient is the beneficial owner; special reduced or full exemptions apply for bona fide banks and governmental entities, and specified export-credit-guaranteed debt. The withholding limits do not apply if the beneficial owner's interest is effectively connected with a permanent establishment or fixed base in the source State, in which case business profits or independent personal services rules apply. Related-party excess interest is limited to arm's-length amounts, and treaty relief is denied where treaty benefits were a main purpose of the transaction.
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 under the treaty: source-state withholding is limited for beneficial owners, with special exemptions and anti abuse rules.
Article 12 permits taxation of interest in the recipient's State while allowing the source State to tax such interest subject to capped withholding when the recipient is the beneficial owner; special reduced or full exemptions apply for bona fide banks and governmental entities, and specified export-credit-guaranteed debt. The withholding limits do not apply if the beneficial owner's interest is effectively connected with a permanent establishment or fixed base in the source State, in which case business profits or independent personal services rules apply. Related-party excess interest is limited to arm's-length amounts, and treaty relief is denied where treaty benefits were a main purpose of the transaction.
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