Witholding tax on royalties from Saudi Arabia
Treaty | Saudi Arabia |
Article | Royalties |
Signed | 13 October 2008 |
In force | Not yet entered into force |
1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed 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 the
beneficial owner of the royalties, the tax so charged shall not exceed 7 percent of the gross amount of the royalties. The competent authorities of the
Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. The term 'royalties' as used in this Article means payment of any kind received as a consideration for the use of, or the right to use, any copyright of literary,
artistic or scientific work including cinematograph films, or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model,
plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial,
commercial or scientific experience.
4. The provisions of paragraph 1 and 2 of this Article shall not apply if the beneficial owner of the royalties, 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 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 a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political or administrative subdivision, a local authority or a
resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a
permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, 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 lastmentioned 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.
The above information is the wording of the article dealing with the withholding tax on royalties of the tax treaty between The Netherlands and Saudi Arabia. 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 via e-mail or call us at our offices: Ph. + 31 (10) 2010466.