Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

OECD definition

What does OECD mean? In legal practice, “OECD” refers to the Organisation for Economic Co‑operation and Development, an intergovernmental body of 38 member countries (including the UK and Ireland) whose economic research, standards and policy recommendations often shape domestic law, treaty practice and compliance. The term is descriptive rather than a defined legal term; however, UK and Irish legislation, regulations and treaties frequently incorporate or refer to OECD instruments. Key touchpoints include: - Tax: the OECD Model Tax Convention, OECD Transfer Pricing Guidelines (used by HMRC and Irish Revenue as interpretative guidance), the BEPS project and Pillar Two/GloBE rules implemented in both jurisdictions. -...

UK guide to royalties articles in double tax treaties: definitions, taxing rights, beneficial ownership, anti-avoidance (PPT/MLI, section 917A), PE and special relationship rules, and withholding tax practice

Published by a LexisNexis Tax expert

Practice notes

Article 12 of the Organisation for Economic Co-Operation and Development (oecd)’s model tax convention (MTC)

Article 12 addresses how royalties arising in cross-border situations are taxed. It sets out how taxing rights are apportioned between two jurisdictions:

the state where the recipient of the payment is resident (the recipient state), and
the state where the payer is resident (the source state)

This Practice Note examines:

what constitutes royalties under a double tax treaty or convention (DTT)
the model convention’s method for taxing royalties
targeted anti–treaty shopping measures
how individual DTTs deviate from the model approach, and
the practical scenarios in which the royalties article must be considered

The EU Interest and Royalties Directive, which eliminated withholding tax on royalty payments between associated companies in different EU Member States and was implemented in UK law, was repealed following the UK’s exit from the EU with effect from 1 June 2021 (or from 3 March 2021 where payments occurred in disqualifying circumstances)...

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Web page updated on 21/05/2026

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