DT2658A - Particular agreements: Australia: Royalties

The new Agreement applies from 1st July 2004 for both UK and Australian withholding tax. It provides for a reduced rate of withholding tax of 5% in either direction.

The definition of royalties does not follow the standard OECD definition. In any case of doubt, the exact wording must be consulted.

Under the previous agreement, the reduced rate of withholding tax on royalties was 10% in either direction.

Under both agreements, this reduced rate is not available

• if the royalties were effectively connected with a permanent establishment in the other country;
• for any amount paid in excess of the amount that would have been agreed between unconnected persons; or
• if the royalty was created or assigned to take advantage of the Article.