Taxation of cross-border interest limited by treaty; source tax capped and exemptions for specified public institutions apply. Article 11 permits taxation of interest by the recipient's State while allowing source-state taxation subject to a capped tax where the beneficial owner is resident of the other State; certain governmental and specified public financial institutions are exempt. 'Interest' covers income from debt claims broadly, excluding late-payment penalties. Interest effectively connected to a permanent establishment or fixed base is treated as arising in the State of that establishment and is taxed under business or professional profit rules. Payments inflated by special relationships are limited to the arm's-length amount for treaty benefits, with excess taxable under domestic law.
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.
Taxation of cross-border interest limited by treaty; source tax capped and exemptions for specified public institutions apply.
Article 11 permits taxation of interest by the recipient's State while allowing source-state taxation subject to a capped tax where the beneficial owner is resident of the other State; certain governmental and specified public financial institutions are exempt. "Interest" covers income from debt claims broadly, excluding late-payment penalties. Interest effectively connected to a permanent establishment or fixed base is treated as arising in the State of that establishment and is taxed under business or professional profit rules. Payments inflated by special relationships are limited to the arm's-length amount for treaty benefits, with excess taxable under domestic law.
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