HMRC internal manual

Double Taxation Relief Manual

Guidance by country: China: royalties

Royalties (as defined by the Agreement) beneficially owned by a United Kingdom resident may be taxed in China, but the tax so charged shall not exceed:

  • 10% of the adjusted amount where the payment is made for the use of, or the right to use, industrial commercial or scientific equipment.  The adjusted amount for these purposes is 60% of the gross amount of the payment.
  • 10% of the full amount of the royalties in other cases.

Where the royalty is effectively connected with a permanent establishment which the United Kingdom resident recipient has in China, the provisions of Article 7 will apply.