Argentina - Royalty

Article 13. Royalties

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:

a)3 per cent of the gross amount paid for the use of, or the right to use, news;

b)5 per cent of the gross amount paid for the use of, or the right to use, any copyright of literary, artistic or scientific work (but not including royalties in respect of motion picture films and works on film or videotape or other means of reproduction for use in connection with television); or

c)10 per cent of the gross amount paid for the use of, or the right to use, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, computer software, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience, and includes payments for the rendering of technical assistance;

d)15 per cent of the gross amount of the royalties in all other cases.

3. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of paragraph 2.

4. 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, news, any copyright of literary, artistic or scientific work including motion picture films and works on film, videotape, or other means of reproduction for use in connection with television, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use computer software, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience, and includes payments for the rendering of technical assistance.

5. The provisions of paragraphs 1 and 2 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 case the provisions of Article 7 or Article 15, as the case may be, shall apply.

6. Royalties shall be deemed to arise in a Contracting State 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 a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the obligation 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.

7. 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 Contracting State, due regard being had to the other provisions of this Convention.

Protocol:

Ad Articles 7 and 13

It is understood that income from financial leasing activities shall not be considered as “payments received for the use of or the right to use industrial, commercial or scientific equipment".

Ad Articles 7, 10, 11, 12, 13, 14 and 15

a)Where tax has been levied at source in excess of the amount of tax chargeable under the provisions of Articles 7, 10, 11, 12, 13, 14 and 15 applications for the refund of the excess amount of tax have to be lodged with the competent authority of the State having levied the tax, within a period of three years after the expiration of the calendar year in which the tax has been levied;

b)The competent authorities of the Contracting States may by mutual agreement settle the mode of application of Articles 7, 11, 14 and 15.

Ad Articles 9 and 28

It is understood that the provisions of the Convention shall not be interpreted so as to prevent the application by a Contracting State of the thin capitalization provisions provided for in its domestic law, except in those cases in which the associated enterprises can prove that due to the special characteristics of their activities or their specific economic circumstances, the conditions made or imposed between those enterprises are in conformity with the arm's length principle.

In accordance with paragraph 3 of Article 28 the competent authorities shall endeavour to resolve by mutual agreement, as in the case of all other situations of double taxation due to actions of one or both of the Contracting States, any case of double taxation arising by reason of the application of internal law regarding thin capitalization.

Ad Article 13

It is understood that the limitations on the taxation at source provided for under paragraph 2 are, in the case of Argentina, subject to the registration requirement provided for in its domestic legislation in force at the date of signature of this Convention and as long as this requirement is in effect.

Ad Article 13

In the case of payments for technical assistance, the tax charged under subparagraph c) of paragraph 2 of Article 13 shall be determined after the deduction of the expenses directly related to such activities.

Ad Articles 7, 10, 11, 12, 13, 14, 15 and 23

If under any double tax treaty concluded after the date of conclusion of this Convention between the Republic of Argentina and a third country which is a member of the OECD, the Republic of Argentina limits its taxation at source on insurance or reinsurance premiums, on dividends as meant in subparagraph a) of paragraph 2 of Article 10, on branch profits, on interest, on royalties, on capital gains, on independent personal services, on other income as meant in Article 23, or on specific items of such income, to a rate lower, including exemption from taxation, exemption from the additional taxation as meant in Article 11, or a taxation over a reduced taxable base, than the rates provided for in paragraph 5 of Article 7, subparagraph a) of paragraph 2 of Article 10, Article 11, paragraph 2 of Article 12, paragraph 2 of Article 13, paragraphs 2, 5 and 6 of Article 14, subparagraph b) of paragraph 2 of Article 15 and paragraph 3 of Article 23 of this Convention, respectively, then the lower rates, the exemption or the reduced taxable base as provided for in the double tax treaty concerned shall automatically apply to the residents of both Contracting States, with effect from the date of the entry into force of such double tax treaty, in respect to the relevant type or category of income.