DT13561 - DT: Morocco: double taxation agreement, Article 12: Royalties

(1) Royalties arising in a Contracting State which are derived and beneficially owned by a resident of the other Contracting State may be taxed in that other State.

(2) However, such royalties may also be taxed in the Contracting State in which they arise and according to the law of that State, but the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

(3) The term `royalties` as used in this Article means:

1. payment of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematograph films, and films or tapes for radio or televised broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, agricultural industrial, commercial, or scientific equipment, not comprising immovable property within Article 6, or for information concerning agricultural, industrial, commercial or scientific experience;
2. payment of any kind to any person, other than to an employee of the person making the payment, in consideration for services of a managerial, technical or consultancy nature, provided that a resident of one of the Contracting States who receives payments of this nature which arise in the other Contracting State may elect, for any taxable period, for the tax chargeable in respect of them in the Contracting State in which they arise to be calculated as if he had a permanent establishment in the last- mentioned Contracting State and as if they were taxable in accordance with Article 7 as profits attributable to the permanent establishment, but in no such case shall the expenses deductible in calculating the tax so chargeable exceed 70 per cent of the gross amount of the payments. The tax payable in the Contracting State in which the payment arises may be deducted from the gross amount of the payment.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, has in the other Contracting State in which the royalties arise a permanent establishment with which the right or property giving rise to the royalties is effectively connected. In such a case, the provisions of Article 7 shall apply.

(5) Royalties shall be deemed to arise in a Contracting State where 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 a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the contract giving rise to the payment of the royalties was concluded and the royalties are borne by that permanent establishment, then the royalties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

(6) Where, owing to a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties paid exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last- mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention.