Paragraph 7 of the Exchange of Notes to the 1994 Double Taxation Agreement (DTA) contains a “Most Favoured Nation” (MFN) provision relating to royalties (Article 12). It gives UK residents access to any lower rates agreed by Estonia in a DTA it later agrees with an OECD member country (that was a member when the UK/Estonia DTA was signed in 1994).
The Estonia/Switzerland DTA, which entered into force on 16 October 2015, provides for resident state taxation only of royalties and so the 1994 MFN provision has been triggered. The effect of this provision is that from 16 October 2015 no source state taxation is permitted under the DTA in respect of royalties.
