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Note: This Treaty may be impacted by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). MLI impact on Tax Treaties is available with the Orbitax International Tax Research & Compliance Expert.

ARTICLE 12

Royalties

(1) Royalties arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable in that other State.

(2) However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is a resident of the other Contracting State, the tax so charged shall not exceed 10 percent of the gross amount of the royalties.

(3) The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright in literary, artistic or scientific work, including cinematographic films or tapes or other recordings for television or radio transmission or satellite, cable, optical fiber transmissions or other such technologies used for public transmissions, magnetic tapes, discs or laser discs (software); for the use of or the right to use any patent, trademark, design or model, plan, secret formula or process or other intangible property; for the use of, or the right to use any industrial commercial or scientific equipment, or for information related to industrial, commercial or scientific experience and for technical support and the provision of services and personnel other than those described in Articles 14 and 15 of this Convention.

The term "royalties" also includes the profits from having these goods and merchandise or the right associated to them with regard to the production, productivity, usage or accessibility of these goods and merchandise.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the recipient of the royalties or fees, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein or carries out independent personnel services through a fixed base, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment.:

  • (a) the permanent establishment or the fixed base in question; or
  • (b) the business described in sub-paragraph (c) of paragraph (1) of Article 7 of this Convention.

In this case, the provisions of Article 7 or of Article 14 of this Convention, as the case may be, shall apply.

(5) Royalties shall be deemed to arise in a Contracting State if the payer is a resident of that Contracting State, one of its political sub-divisions or local authorities. Where, however, the person paying the royalties, whether he is resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.

(6) Where, by reason of a special relationship, either between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right of use or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the recipient of the royalties in the absence of such special relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.