Applicability of bilateral tax treaties in triangular cases – Part 3

In Part 2, I have discussed PE triangular case. In this part, i am focusing on second situation i.e. Reverse PE triangular case.

In a reverse PE triangular case, both the head office state (State A) and the PE state (State B) of the payer may seek to impose source-based taxation on the payment made to the resident of the third state. Example – Let’s presume that head office (State A) and its pays interest to the resident of State C on a loan that can be attributed to the PE in State B (i.e. income originates from PE in State B). The same is illustrated below –

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