In force since August 16, 1984
US–Canada Tax Treaty
Every rate below carries the article that sets it and the date we read it — because protocols move rates and leave the article numbers alone.
Every rate on this page is cited to the treaty article that authorises it. Treaty texts last read September 9, 2026.
Quick answer
The US–Canada income tax treaty has been in force since August 16, 1984. It reduces US withholding on Canada residents’ US-source income below the 30% statutory rate — portfolio dividends at 15%, interest at 0%. You claim it with Form W-8BEN before you are paid, not on a return afterwards.
Key takeaways
- In force since August 16, 1984, amended by 5 protocols — which is why the article numbers below carry their amendment chain.
- Interest is 0% — taxable only in the residence state. This is worth knowing because summary tables routinely still show a positive rate.
- A totalization agreement is in force, so social security contributions are a separate and solvable problem.
- Claim it on Form W-8BEN before payment. A treaty rate you did not claim is recovered only by filing a US return.
The rates, by article
Each figure below is the ceiling the treaty sets on US withholding, with the article that sets it.
US–Canada withholding ceilings. Statutory rate without a treaty: 30%.
| Income type | Treaty rate | Instead of |
|---|---|---|
| Dividends — portfolio | 15%Article X(2)(b) | 30% |
| Dividends — direct (corporate holder) | 5%Article X(2)(a), as amended by the 1995 protocol, Article 5(1) | 30% |
| Interest | 0%Article XI(1), as replaced by the 2007 protocol, Article 6 | 30% |
| Royalties — Copyright — literary, dramatic, musical and artistic works | 0%Article XII(3) | 30% |
| Royalties — Computer software | 0%Article XII(3)(b), as replaced by the 1995 protocol, Article 7(1) | 30% |
| Royalties — Patent, and industrial, commercial or scientific know-how | 0%Article XII(3)(c), as replaced by the 1995 protocol, Article 7(1) | 30% |
| Royalties — Broadcasting — requires a qualifying exchange of notes between the two states | No numeric ceiling | 30% |
| Royalties — General — trademark, design, plan, secret formula, equipment rental, and film or television | 10%Article XII(2) | 30% |
The direct-dividend rate of 5% requires the beneficial owner to be a company holding at least 10% — Per cent of the voting stock of the paying company.. This treaty imposes no minimum holding period.
A rate without its article is not an answer
Protocols replace whole articles and usually keep the article number while changing the rate inside it. That is why every figure above shows its article as amended. Reading the base treaty text alone — which is what the IRS-hosted PDF gives you — produces superseded rates for several treaties in this set.
Interest — the exceptions
The headline interest rate is not the whole story for this treaty.
Interest here splits by category rather than running at a single rate. Presenting the lowest as “the” treaty rate overstates the benefit, so every class is shown:
Interest rates by class
| Class of interest | Rate |
|---|---|
| General interest | 0%Article XI(1), as replaced by the 2007 protocol, Article 6 |
| Contingent interest arising in the United States that does not qualify as portfolio interest under US law | 15%Article XI(6)(a), as replaced by the 2007 protocol, Article 6 — capped at the Article X(2)(b) rate |
| Excess inclusion with respect to a residual interest in a real estate mortgage investment conduit (REMIC) | Left to domestic law |
These exceptions change the answer even where the headline rate is clear:
Related-party interest — phase-in (spent)
7% in the first calendar year ending after entry into force, 4% in the second, then 0%. Relevant only to historical returns.
2007 protocol, Article 26(3)(d)
Effectively connected interest
Where the debt-claim is effectively connected with a permanent establishment, Article VII (Business Profits) applies instead.
Article XI(3)
Where people get this wrong
Each of these is a claim we found stated incorrectly on other sites, or a condition that is routinely dropped.
Almost every summary says 15% interest. It is 0%.
The 1980 base text says 15%, the 1995 protocol says 10%, and the 2007 protocol deleted the article and replaced it with a flat exemption. All three numbers are citable to a real government document, and only the last one is current.
The student article does not cover your US wages.
Article XX exempts payments received from outside the United States for maintenance, education or training. Money you earn in the United States is not covered. Some other treaties do carve out personal-services income; this one does not.
A green card destroys the student exemption.
Article XXIX(3)(b) preserves Article XX only for people who are neither citizens nor immigrants of the taxing state. The moment you hold a green card, the savings clause applies to you and the exemption stops.
The royalty class decides the rate, and the split is unusual.
Software, patents and know-how are 0%. A trademark, a piece of rented equipment or a television film is 10%. Know-how bundled into a franchise agreement is 10% even though know-how on its own is 0%.
Students, teachers and pensions
These articles decide more real cases than the withholding rates do — and they are the ones the savings clause fights over.
Students and trainees
ArticleArticle XXArticle XX
ReliefExemption for maintenance, education and training payments received from OUTSIDE the United StatesArticle XXNarrower than most people expect. It does not exempt US-source wages — there is no equivalent of the personal-services carve-out found in some other treaties.
Annual capNo dollar cap — but also no coverage of US-source earnings.
Year limitThe article states no year limit.
Survives the savings clausefalseArticle XXIX(3)(b)Article XX survives the savings clause ONLY for individuals who are neither citizens of, nor have immigrant status in, the taxing state. A Canadian student who becomes a green-card holder loses the exemption.
ConditionsMust be, or have been immediately before the visit, a resident of Canada, and be present in the United States for the purpose of full-time education or training.Article XX
Teachers and researchers
ArticleThis treaty has NO teachers or professors article. The articles run XIX Government Service, XX Students, XXI Exempt Organizations — there is nothing in between.
Year limitNo teachers article exists.
Retroactive clawbackNo teachers article exists.
Survives the savings clauseNo teachers article exists.
ConditionsNo teachers article exists.
Pensions
Private pensionsArticle XVIII(1) and (2)(a)Article XVIII(1), (2)(a)The source state may tax periodic pension payments, capped at 15% of the gross payment.
Social securityArticle XVIII(5)Article XVIII(5)Social security benefits are taxable ONLY in the state whose legislation pays them.
Which country taxesThe residence state taxes, with a 15% source-state cap on periodic pensions. Social security is taxed only by the paying state.Article XVIII
The savings clause
Nearly every US treaty reserves the right for the United States to tax its own citizens and residents as though the treaty did not exist. The exceptions are what make a treaty useful to a US person at all.
ArticleArticle XXIX(2)Article XXIX(2)
Articles preserved against it:
- XVIII Pensions and Annuities, XIX Government Service, XXI Exempt Organizations, XXIV Elimination of Double Taxation, XXV Non-Discrimination, XXVI Mutual Agreement Procedure — Article XXIX(3)(a)
- XX Students — Article XXIX(3)(b) Conditional: Only toward individuals who are neither citizens of, nor have immigrant status in, that State.
How to claim it
Before you are paid, on a W-8BEN given to the payer. Not on a return afterwards.
- Give the payer a Form W-8BEN. Name Canada on line 9. For ordinary dividend and interest claims that is all Part II needs — leave line 10 blank.
- For royalties, scholarships or a conditioned claim, line 10 needs the article and rate. How to find your article number walks through it, and the articles for this treaty are in the table above.
- Check whether a disclosure is owed. Most individual FDAP claims are waived from Form 8833, but a position that overrides the Code may not be.
- If tax was already withheld at 30%, the routes are a refund claim on a US nonresident return, or the foreign tax credit in your own country.
Get the form in before the payment, not after
A treaty rate is applied by the payer at the moment they pay you. Submit the W-8BEN afterwards and the 30% has already gone — recovering it means filing a US return and waiting the better part of a year.
How this treaty compares
The same four rates for every country in this set, so you can see where Canada actually sits.
| Country | Dividends | Dividends (large stake) | Interest | Royalties (lowest) |
|---|---|---|---|---|
| Brazil | No treaty30% statutory | No treaty30% statutory | No treaty30% statutory | No treaty30% statutory |
| China | 10%Article 9(2) | 10%Article 9(2) | 10%Article 10(2)split by category | 7%Article 11(2), read with the protocol, paragraph 6split by class |
| France | 15%Article 10(2)(b), as replaced by the 2009 protocol | 5%Article 10(2)(a), as replaced by the 2009 protocol+0% tier, conditional | 0%Article 11(1)split by category | 0%Article 12(1), as replaced by the 2009 protocol |
| Germany | 15%Article 10(2)(b), as substituted by the 2006 protocol | 5%Article 10(2)(a), as substituted by the 2006 protocol+0% tier, conditional | 0%Article 11(1) | 0%Article 12(1) |
| Italy | 15%Article 10(2)(b) | 5%Article 10(2)(a) | 10%Article 11(2)split by category | 0%Article 12(3)split by class |
| Japan | 10%Article 10(2)(b) | 5%Article 10(2)(a)+0% tier, conditional | 0%Article 11(1), as replaced by the 2013 protocol, Article IVsplit by category | 0%Article 12(1) |
| Korea | 15%Article 12(2)(a) | 10%Article 12(2)(b) | 12%Article 13(2)split by category | 10%Article 14(2)split by class |
| Mexico | 10%Article 10(2)(b), as substituted by the 2003 protocol, Article II(a) | 5%Article 10(2)(a), as substituted by the 2003 protocol, Article II(a)+0% tier, conditional | 15%Article 11(2)(c)split by category | 10%Article 12(2) |
| Philippines | 25%Article 11(2)(a) | 20%Article 11(2)(b) | 15%Article 12(2)split by category | 15%Article 13(2)(a) |
| Spain | 15%Article 10(2)(b), as replaced by the 2013 protocol, Article IV | 5%Article 10(2)(a), as replaced by the 2013 protocol, Article IV+0% tier, conditional | 0%Article 11(1), as replaced by the 2013 protocol, Article Vsplit by category | 0%Article 12(1), as replaced by the 2013 protocol, Article VI |
| United Kingdom | 15%Article 10(2)(b) | 5%Article 10(2)(a)+0% tier, conditional | 0%Article 11(1) | 0%Article 12(1) |
Every figure is read from the treaty text or a protocol, with the authorising article shown beneath it. Two flags matter as much as the numbers: split means the treaty charges different rates for different categories of payment, so the figure shown is the lowest and may not be yours; +0% tier means a conditional zero rate exists for large corporate holdings, which depends on ownership, a holding period and a limitation-on-benefits test that a table cannot resolve. Use the lookup for either.
Frequently asked questions
What is the US–Canada tax treaty withholding rate on dividends?
15% on portfolio dividends under Article X(2)(b), against a statutory rate of 30% without a treaty. A corporate holder owning at least 10% qualifies for 5% instead. You claim it by giving the payer a Form W-8BEN naming Canada as your country of residence for treaty purposes — before the payment is made, not afterwards.
What is the interest withholding rate under the US–Canada treaty?
It depends on the kind of interest, which makes this treaty unusual — 0% on general interest, 15% on contingent interest arising in the united states that does not qualify as portfolio interest under us law. Quoting the lowest of those as "the" treaty rate overstates the benefit, so you have to identify which class your interest falls into before claiming a rate. Our lookup shows every class rather than picking one.
What is the royalty rate under the US–Canada treaty?
There is more than one. This treaty splits royalties by class: 0% on copyright — literary, dramatic, musical and artistic works; 0% on computer software; 0% on patent, and industrial, commercial or scientific know-how; 10% on general — trademark, design, plan, secret formula, equipment rental, and film or television. Claiming the lowest rate for a payment that belongs in a higher class is a common error, and it is the payer who gets asked about it. Line 10 of your W-8BEN needs the article and the rate for your actual class.
How do I claim US–Canada treaty benefits?
Give the payer a Form W-8BEN before you are paid, naming Canada on line 9 as your country of residence for treaty purposes. For ordinary dividend and interest claims that is all of Part II you need — leave line 10 blank. Royalties, scholarships and conditioned claims do need line 10, with the treaty article and rate. The form goes to the payer, never to the IRS.
Has the US–Canada treaty been amended?
Yes — by 5 protocols. First protocol. Second protocol. Direct dividends cut from 10% to 5% (Article 5(1)); interest cut from 15% to 10% (Article 6(1)); the 0% royalty class extended to computer software and to patent and know-how payments (Article 7). Fourth protocol. Article XI (Interest) deleted and replaced in full: source-state withholding on interest eliminated, with a 7% then 4% phase-in for related-party interest. This matters more than it sounds: a protocol usually replaces a whole article while keeping its number, so the article you cite stays the same and the rate inside it changes. Reading the base treaty text alone produces superseded rates.
Does the US–Canada treaty cover social security?
No — but a separate agreement does. The income tax treaty does not touch social security contributions; a totalization agreement handles those, and one with Canada is in force. A totalization agreement with Canada has been in force since 1984-08-01. It covers social security contributions and pension credits only — it does not touch income tax. You claim it with a certificate of coverage given to your employer, not with any tax form.
Can a US citizen use the US–Canada treaty?
Rarely, because of the savings clause in Article XXIX(2). It reserves the right for the United States to tax its own citizens and residents as though the treaty did not exist, and only the articles expressly preserved against it survive. For a US citizen the treaty usually helps by reducing the Canada side of the bill, with the foreign tax credit doing the rest.
Sources
Every figure on this page was read from a primary source on the date shown beside it. This country’s file was last read in full on September 9, 2026.
- US–Canada Income Tax Convention (1980), with protocols 1–4 — Base articles and the 1983/1984/1995/1997 protocol amendments
- US–Canada protocol signed 21 September 2007 — Article XI replacement (interest to 0%) and later amendments
- SSA POMS GN 01701.005 — International Social Security (Totalization) Agreements — Which countries have a totalization agreement in force, and each agreement's effective date
Treaty rates are ceilings on withholding, not a computation of your liability, and conditions inside an article can change the answer for you specifically. This page is educational and is not advice on your position.
Related
Tax Treaty Benefits & Country Lookup
Free tool: is there a treaty with your country, what rate, and which form claims it
Form W-8BEN
The form your broker or payer asks for, and what it actually does
Foreign Tax Credit
The relief that works when no treaty does — credit against deduction
Form 8833
When you must disclose a treaty position, and what to write on each line
Totalization Agreements
Social security, the second treaty network, and why it covers different countries
Educational information, not tax advice
Every rate and article on this page is cited to the treaty text it comes from, so you or your accountant can check it. Treaty provisions turn on facts we do not know about you — residency, beneficial ownership, limitation-on-benefits conditions and the savings clause can all change the answer. Read the article before you rely on the number, and take advice on anything material.
Social security
A separate agreement decides this, not the tax treaty — and it covers a different list of countries.
A totalization agreement with Canada has been in force since 1984-08-01. It covers social security contributions and pension credits only — it does not touch income tax.
That means someone working across the two countries pays social security contributions into one system rather than both, on a certificate of coverage given to their employer. It does not reduce income tax, and the income tax treaty does not reduce social security. How totalization agreements work.