Treaty detail
United States - Canada tax treaty
A practical treaty page built around the official treaty text, key withholding categories, permanent-establishment rules, and article-level summaries.
Signed
1980-09-26
Effective
1985-01-01
Articles seeded
6
Withholding snapshot
Dividends
Individual rate: 15% · Corporate rate: 5%
The lower corporate rate generally applies where ownership and treaty-qualification conditions are satisfied.
Interest
Rate: 0%
Specific exceptions and anti-abuse rules still require article-level review.
Royalties
Rate: 10%
The treaty includes category-specific royalty treatment; some categories can differ from the general royalty rule.
Permanent establishment
Construction threshold: 12 months
Dependent-agent rules remain relevant where a person acts on behalf of the enterprise with sufficient authority under the treaty framework.
Other treaty flags
Seeded article summaries
Article 4
Residence
Defines treaty residence and supports dual-resident tie-breaker analysis.
Residence is the gateway issue for treaty benefits. Taxpayers moving between the two countries should not jump to a withholding article before confirming treaty residence.
Article 5
Permanent Establishment
Determines when business presence in the other state is substantial enough to permit source-country business taxation.
The PE article is a recurring decision point for founders, remote businesses, and services providers operating across the border.
Article 7
Business Profits
Generally allocates business profits to the residence state unless a permanent establishment exists in the other state.
This article is the working core for many cross-border business questions, and it should be read together with the PE article.
Article 10
Dividends
Limits source-country withholding on dividends in qualifying cases.
The dividend article is commonly used in portfolio and closely held corporate structures, especially where U.S. and Canadian holding companies interact.
Article 12
Royalties
Provides treaty treatment for royalty payments and category-specific rules.
The royalty article is important for software, IP, and licensing questions. It should not be summarized as a one-number answer without checking the income category.
Article 18
Pensions and Annuities
Contains high-value rules for retirement distributions and cross-border pension treatment.
The pension article is one of the most practically important parts of the treaty for individuals, and it is a reason Publication 597 is especially useful.
Official text
Primary sources
- Canada treaty documents pageVerified 2026-05-01
- Official U.S.-Canada treaty PDFVerified 2026-05-01
- IRS Publication 597Verified 2026-05-01
Important disclaimer
This library is for general tax education only. Always verify filing obligations, due dates, and tax consequences against the cited primary source or with a qualified tax professional.