Tax Treaty

Definition

A tax treaty is a negotiated international agreement that can reduce withholding, protect business profits absent a permanent establishment, provide residence tie-breaker rules, and shape how cross-border income is taxed. Treaty benefits depend on the actual treaty text, the relevant article, and the taxpayer's facts.

Examples

• A treaty can reduce dividend withholding below domestic-law rates.
• A treaty can limit source-country business taxation where no permanent establishment exists.