Canada-Estonia Tax Convention – “Most Favoured Nation” provision takes effects to eliminate source-state taxation rights in respect of certain royalties

Events have resulted in the exemption described in Article 12(7) of the Canada-Estonia Tax Convention to have effect in respect of royalties paid or credited on or after January 1, 2016.  As a result, the following types of royalties are, in the context of the circumstances described in Article 12(2), exempt from tax in the state in which they arise:

1. copyright royalties and other like payments in respect of the production or reproduction of any literary, dramatic, musical or artistic work (but not including royalties in respect of motion picture films nor royalties in respect of works on film or videotape or other means of reproduction for use in connection with television broadcasting); or
2. royalties for the use of, or the right to use, any patent or any information concerning industrial, commercial or scientific experience (but not including any such information provided in connection with a rental or franchise agreement).

In circumstances where tax has been withheld on the types of royalties defined above and paid after January 1, 2016:

• an Estonia resident taxpayer can complete form NR7-R, Application for Refund of Part XIII Tax Withheld to apply for a refund of non-resident Part XIII tax withheld. The application must be made within two years from the end of the calendar year in which the amount was paid. Please send the application to: International and Ottawa Tax Services Office, Non-Resident Withholding Division, P.O. Box 9769, Station T, Ottawa, ON, K1G 3Y4, CANADA.
• a Canadian resident taxpayer can complete form TM3 to apply for a refund of Estonian tax withheld and send the application to a service bureau of the Estonian Tax and Customs Board within three years after the due date for payment of the tax. A letter will be accepted if it contains the same information as required on form TM3. Section III of this form requires the certification of Canadian residency which can be completed by contacting the Competent Authority Services Division. Once form TM3 is completed, please send the application to: Estonian Tax and Customs Board, Lõõtsa 8a, 15176 Tallinn, ESTONIA.