Replaced by new DTA, which applies in UK from 1st April 2003 for
CT, 6th April 2003 for IT and 1st January 2004 for PRT. For US
withholding taxes it applies from 1st May 2003 and for other US
taxes from 1st January 2004. See DT19939B.
(1) Royalties derived and beneficially owned by a resident
of the United Kingdom shall be exempt from tax by the United
States.
(2) Royalties derived and beneficially owned by a resident
of the United States shall be exempt from tax by the United
Kingdom.
(3) The term `royalties` as used in this Article (a) means
payments of any kind received as a consideration for the use of, or
the right to use, any copyright of literary, artistic or scientific
work (but not including cinematographic films or films or tapes
used for radio or television broadcasting); any patent, trade mark,
design or model, plan, secret formula or process, or other like
right or property, or for information concerning industrial,
commercial or scientific experience, and (b) shall include gains
derived from the alienation of any such right or property which are
contingent on the productivity, use, or disposition thereof,
including the supply of assistance of an ancillary and subsidiary
nature furnished as a means of enabling the application or
enjoyment of any such right or property.
(4) The provisions of paragraphs (1) and (2) of this Article
shall not apply if the person deriving the royalties, being a
resident of a Contracting State, carries on business in the other
Contracting State in which the royalties arise, through a permanent
establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein,
and the right or property in respect of which the royalties are
paid is effectively connected with such permanent establishment or
fixed base. In such a case the provisions of Articles 7 (Business
profits), 14 (Independent personal services), or 17 (Artistes and
athletes), as the case may be, shall apply.
(5) Where, owing to a special relationship between the payer
and the person deriving the royalties or between both of them and
some other person, the amount of the royalties paid exceeds for
whatever reason the amount which would have been paid 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.
