royalties paid by German Customer to Indian Entity.

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This query is : Resolved

HITESH KHONA (Querist)

20 May 2011 Hi All,
with reference to above,
My query is, a german co is paying royalties for some software products to the indian co. So in this case do the German Co have to deduct the tax on the amount paid to the Indian Co.

If yes, please provide me the section, rules or DTAA arrangement.
The fiscal authorities of German Co are asking that the German Co should deduct the tax on the remittance to the Indian Co

Please help me on this at the earliest
Thanks in advance
Regards
Hitesh

U S Sharma

U S Sharma (Expert)

20 May 2011 in both companies has no common place of business either in germany or india, then TAX would be deducted by payee

HITESH KHONA

HITESH KHONA (Querist)

20 May 2011 Dear Mr Sharma,
Thanks for your reply. Can you elaborate this in detail
Regards
Hitesh

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)

20 May 2011 THE GERMAN CO WILL BE GIVERENED BY GERMAN LAW
AND UNDER THAT IT WILL HAVE TO DEDUCT TAX
WHAT IS THE PROBLEM IN THAT

CA MANOJ GUPTA
JODHPUR
09828510543

CA. Anuj Gupta

CA. Anuj Gupta (Expert)

21 May 2011 As per Article 12 of India-Germany DTAA the term royalty means"The term royalties as used in this Article 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, including cinematograph films or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

Here as it has been held by OECD that mere supply of software shall not be deemed to royalty.

So kindly check whether the German Co. is paying royalty as per Article 12 or something else.

If it is royalty then TDS @ 10% is there.

Anuj
0-9810106211

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