Royalties were payable by Canco to a non-resident for the right to use copyright and trademarks in connection with the design, manufacturing and sale of products in countries in a particular region.
The Directorate indicated that since the royalties paid were royalties under general principles, it was “not necessary to consider the extent to which the trademarks granted to Canco under the License Agreement are used in or outside of Canada for the purpose of paragraph 212(1)(d),” so that such royalty payments were subject to withholding except to the extent that the exemptions under s. 212(1)(d)(vi) or (x) were available.