Malaysian Court Holds Software Distribution Fees Not Considered Royalties Under Tax Treaty with the Netherlands

On 1 August 2018, the Malaysian High Court issued a decision on whether fees for software distribution may be considered royalties under the 1988 Malaysia-Netherlands tax treaty. The case involved a Malaysian software distributor that paid fees to a related Dutch company under a software distribution agreement. Under the agreement, the Malaysian company only has the right to distribute the software developed by the Dutch company. No other rights in terms of reproducing or exploiting the softw…