Article 12 Royalties
     1. Royalties arising in one of the States and paid to a resident of the other State may be taxed in that other State.
     2. However, such royalties may also be taxed in the State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties the tax so charged shall not exceed:
(a) 15 per cent of the gross amount of the payments referred to in paragraph 3(a);
(b) 15 per cent of the gross amount of the payments referred to in paragraph 3(b);
(c) 5 per cent of the gross amount of the payments referred to in paragraph 3 (c).
     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:
(a) a patent, trademark or tradename, secret formula or process, design or model, or information concerning industrial, commercial or scientific experience;
(b) industrial, commercial or scientific equipment, cinematograph films and tapes for television and broadcasting;
(c) a copyright of a literary, artistic or scientific work, but excluding cinematograph films and tapes for television or broadcasting.
     4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of one of the States, carries on business in the other State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
     5. Royalties shall be deemed to arise in one of the States when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of one of the States or not, has in one of the States a permanent establishment or a fixed base in connection with which the contract under which the royalties are paid was concluded, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
     6. Where, by reason of a special relationship 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 or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such 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 State, due regard being had to the other provisions of this Convention.

The above information is the wording of the article dealing with the withholding tax on royalties of the tax treaty between The Netherlands and Pakistan. Please note that the ultimate withholding tax rate may differ from the treaty rate, for instance as consequence of domestic anti-abuse legislation, provisions of the treaty protocol, etc. Before you use this information we therefore strongly recommend that you consult us to determine the accurate withholding tax rate for your specific situation. If you require our follow up, you can contact us info@taxci.nl or call us at our offices: Ph. + 31 (10) 2010470.