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HMRC internal manual

Double Taxation Relief Manual

DT: Thailand: double taxation agreement, Article 13: Royalties

(1) Royalties arising in a Contracting State and paid to a resident of the otherContracting State may be taxed in that other State.

(2) Such royalties may also be taxed in the Contracting State in which they arise, andaccording to the law of that State, but where the royalties are paid to a resident of theother Contracting State who is subject to tax in that other State in respect of them, thetax so charged in the State in which the royalties arise shall not exceed:

(a) 5 per cent of the gross amount of such payments if they are made as consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work;
(b) 15 per cent of the gross amount of such payments if they are made as consideration for the use of, or the right to use, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, or for the use of, or the right to use, cinematograph films or films or tapes for radio or television broadcasting.

(3) The term `royalties` as used in this Article means payment of any kind received asa consideration for the use of, or the right to use, any copyright of literary, artisticor scientific work (including cinematograph films, and films or tapes for radio ortelevision broadcasting), any patent, trade mark, design or model, plan, secret formula orprocess, or for the use of, or the right to use, information concerning industrial,commercial or scientific experience.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if therecipient of the royalties, being a resident of a Contracting State, has in the otherContracting State in which the royalties arise a permanent establishment with which theright or property giving rise to the royalties is effectively connected. In such a case,the provisions of Article 8 shall apply.

(5) Royalties shall be deemed to arise in a Contracting State where the payer is thatState 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 ContractingState or not, has in a Contracting State a permanent establishment in connection withwhich the obligation to pay the royalties was incurred and the royalties are borne by thatpermanent establishment, then the royalties shall be deemed to arise in the ContractingState in which the permanent establishment is situated.

(6) Where, owing to a special relationship between the payer and the recipient or betweenboth of them and some other person, the amount of the royalties paid exceeds, for whateverreason, the amount which would have been paid in the absence of such relationship, theprovisions of this Article shall apply only to the lastmentioned amount. In that case, theexcess part of the payments shall remain taxable according to the law of each ContractingState, due regard being had to the other provisions of this Convention.

(7) The provisions of this Article shall likewise apply to gains from the alienation ofany right or property giving rise to such royalties if such right or property is alienatedby a resident of a Contracting State for exclusive use in the other Contracting State andthe payment for such right or property is borne by an enterprise of that other State or bya permanent establishment situated therein.