INTM630230 | Royalty Withholding: Anti Treaty Shopping Rules: Payment received by a person connected with the payer

Connected

The payer and payee are connected if they meet the participation condition in TIOPA10/S148. The participation condition is met when one of the two affected persons is directly or indirectly participating in the management, control or capital of the other, or a third person was participating in the management, control or capital of both the affected persons. See INTM412020 for further detail.

For the purposes of S917A, reference to the ‘actual provision’ in TIOPA10/S148 are to be read as the provision made or imposed between the payer and the payee in respect of the royalty payment being made.

Received

ITA07/S917A(4) determines that a payment is received by a payee if received directly or indirectly or by one payment or a series of payments.

Payment

The character of the payment received is not of importance. This means that, for example, a royalty could be paid to an intermediary, who then makes an onward payment of a different nature. If the conditions of S917A are met, the royalty payment would be denied benefits under the relevant treaty.