19 November 2021
The Canada Revenue Agency has published a notice concerning the effect of the MFN provision of the 1996 Canada-Lithuania tax treaty with respect to royalties.
Canada–Lithuania Income Tax Convention: "Most Favoured Nation" provision takes effect to eliminate source-state taxation rights in respect of certain royalties
Effective January 1, 2019, the withholding rate described in paragraph 2 of Article 12 of the Canada–Lithuania Tax Convention has been eliminated with respect to certain royalties.
The following types of royalties paid or credited on or after January 1, 2019 are therefore exempt from tax in the state in which they arise:
This change occurs as a result of the "Most Favoured Nation" provision in paragraph 7 of Article 12 of the Convention and has been confirmed by the Lithuanian Competent Authority.
If, between January 1, 2019 and December 31, 2020, tax was withheld on the types of royalties defined above, taxpayers may seek to obtain a refund.
If you are a Lithuanian-resident taxpayer:
You have two years from the end of the calendar year you paid the tax in to apply for the refund.
If you are a Canadian-resident taxpayer:
A Canadian individual resident can submit this form for the past five years while a Canadian resident entity can submit the form for only the past three years.
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