Article 13 - Fees for Technical Services - Israel

Article 13 FEES FOR TECHNICAL SERVICES 1. Fees for technical services arising in a contracting State and paid to a resident of the other contracting State may be taxed in that other State. 2. However, such fees for technical services may also be taxed in the contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the fees for technical services, the tax so charged shall not exceed 10 per cent of the gross amount of the fees for technical services. 3. The term fees for technical services as used in this article means payments of any kind received as a consideration for services of a managerial, technical or consultancy nature, including the provision of services by technical or other personnel, but does not include payments for services mentioned in Article 16 of this Convention. 4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the fees for technical services, being a resident of a contracting State, carries on business in the other contracting State, in which the fees for technical services arise, through a permanent establishment situated therein, or perform in that other State independent personal services from a fixed base situated therein, and the right, property or contract in respect of which the fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7, or Article 15, as the case may be, shall apply. 5. Fees for technical services shall be deemed to arise in a contracting State when the services are rendered in that State and the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the fees for technical services, whether he is a resident of a contracting State or not, has in a contracting State a permanent establishment or a fixed base in connection with which the liability to pay the fees for technical services was incurred, and such fees for technical services are borne by such permanent establishment or fixed base, then such fees for technical services shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. 6. Where, by reason of special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of fees for technical services paid exceeds 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 such case, the excess part of the payments shall remain taxable according to the laws of each contracting State, due regard being had to the other provisions of this Convention. 7. The provisions of paragraphs 1 to 6 of this article shall not apply to payments relating to services mentioned hereinbelow : (i) Services that are ancillary and subsidiary, and inextricably and essentially linked, to a sale of property; (ii) Services that are ancillary and subsidiary to the rental of ships, aircraft, containers or other equipment used in connection with the operation of ships or aircraft in international traffic; (iii) Teaching in or by an educational institution; (iv) Services for the personal use of the individual or individuals making the payments; or (v) Professional services as defined in Article 15.