Turkey - Royalty

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 the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

3.   The competent authorities of the 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, or the sale of, any copyright of literary, artistic or scientific work including cinematograph films and recordings for radio and television, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experiene, or for the use of, or the right to use, industrial, commercial, or scientific equipment.

5.   The provisions of paragraphs 1 and 2 shall not apply if the recipient 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, in the case of a resident of Turkey, performs in the Netherlands independent personal services from a fixed base situated in the Netherlands, 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.

6.   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, with which the right or property giving rise to the royalties is effectively connected, and such royalties are borne by such permanent establishment or a fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or a fixed base is situated.

7.   Where, by reason of a special relationship between the payer and the recipient or between both of them and some other person, the amount of the royalties paid, 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 recipient 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 Agreement.

Protocol:

VIII. Ad Article 10, 11 and 12

Where tax has been levied at source in excess of the amount of tax chargeable under the provisions of Articles 10, 11 and 12, 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 the time limit provided for in the national legislation of that State.

X. Ad Article 12

It is understood that remuneration for the exercise of independent services (including the furnishing of services) is not a royalty within the meaning of paragraph 4 of Article 12.

XI. Ad Articles 12 and 13

In respect of Articles 12 and 13 of the Agreement it is understood that in the case of any payment received as a consideration for the sale of the property as meant in paragraph 4 of Article 12, the provisions of Article 12 shall apply, unless it is proved that the payment in question is a payment for a genuine alienation of the said property. In such case the provisions of Article 13 shall apply.