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CRA's reply was that the fees would not be considered royalties under the OECD Model Convention and instead would be business profits.  ...

Convention, which applies to income paid by a resident Canadian trust to a resident of the U.S. to the extent such income is "distributed out of income arising outside [Canada]. ...

Email this Content Lee Sheppard has summarized some interesting discussions at a June 2013 conference in Vienna on the dependent agent branch of the permanent establishment definition (Art. 5(5) of the OECD model convention).  ...

V.9(a) of the Canada-US Convention deems a "Canco," which derives more than 50% of its gross active business revenue from services provided by an employee to US businesses during any 12-month period in which that individual is present in the US for more than 183 days, to be deriving those services through a US permanent establishment (so that the resulting profits are not exempt from US income taxation)- or vice versa in the case of a "USCo" providing services to Canadian businesses through an employee who is present in Canada for more that 183 days in a 12-month period. ...

15 May 2014- 3:37pm CRA finds that a Canadian equipment installation project which exceeded 12 months, including on-site preparation of plans and final testing, was a permanent establishment Email this Content CRA found that a contract of a French company to install specialized equipment at a Canadian factory of an arm’s length Canadian company gave rise to a Canadian permanent establishment of it given its general on-site responsibility for ensuring a successful project and given that the the project lasted more than 12 months including preparing detailed specs on-site and final testing – so that the 12 month safe harbour for installation projects in Art. 5, para. 3 of the Canada-France Convention was not available.  ...

Summary of 16 May 2018 IFA Roundtable, Q.1 under Treaties – Income Tax Conventions- Art. 29. ...

Summary of 15 May 2019 IFA Roundtable, Q.2 under Treaties – Income Tax Conventions – Art. 5. ...

Summaries of 3 December 2019 CTF Roundtable, Q.2 under s. 126(1) and Treaties – Income Tax Conventions – Art. 24. ...

Summary of 26 November 2020 STEP Roundtable, Q.4 under Treaties – Income Tax Conventions – Art. 24. ...

Although this response was given in a GST/HST context, the same issue would arise regarding the application of income tax conventions. ...