Government modifies Article 13 of DTAA relating to Royalties and Fees for Technical Services with Spain

The Central Government has modified the Article 13 of Double Taxation Avoidance Agreement ( DTAA )  relating to the royalties and fees for technical services with Spain by invoking Section 90 of the Income Tax Act, 1961.

The Convention, initially established in 1995 to avoid double taxation and prevent fiscal evasion on income and capital. This amendment, effective from the assessment year 2024-25.

Under the newly amended provision, royalties and fees for technical services, while being subject to taxation in the Contracting State where they arise and in accordance with its laws, will now carry a capped tax rate. The recipient, if identified as the beneficial owner of these royalties or fees, shall not incur a tax exceeding ten percent of the gross amount.

The Paragraph 2 of Article 13 will be substituted as follows:

“2. However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the law of that State, but if the recipient is the beneficial owner of the royalties or fees for technical services, the tax so charged shall not exceed ten per cent of the gross amount of royalties or fees for technical services.”

The paragraph 2 of Article 13 of the said Convention, as amended by this notification, shall be applicable with effect from the assessment year 2024-25.

To Read the full text of the Order CLICK HERE

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