background image
5.5. Source Rules with Respect to Income Derived by Non-Residents

Non-residents are subject tax on income sourced from Taiwan. The following covers various income types and the general source rules for each.

Business Profits

Profits from operation of business within Taiwan are deemed Taiwan sourced.

Service Fees

Service fees paid to a non-resident are deemed Taiwan sourced if any of the following conditions are met:

  • The services are rendered within Taiwan;
  • The services are partly rendered within Taiwan; or
  • The services are rendered outside Taiwan but require the involvement and assistance of Taiwanese resident individuals or enterprises.

*Note - Fees as a result of services rendered by an individual residing in Taiwan for 90 days or less during a taxable year are not considered Taiwan sourced.

Property Sales

Profits resulting from the sale of property situated in Taiwan are deemed Taiwan sourced.


Dividends received from companies that are incorporated and registered in Taiwan and from foreign companies authorized to operate in Taiwan are deemed Taiwan sourced.

Partnership Profits

Profits distributed by a partnership formed in Taiwan are deemed Taiwan sourced.


Interest paid by Taiwan residents to non-residents is deemed Taiwan sourced.

Rental income

Rental income from property situated in Taiwan is deemed Taiwan sourced.


Royalty fees paid for the use of intellectual property in Taiwan are deemed Taiwan sourced. In the case where royalties are paid by a Taiwan resident to a non-resident contract manufacturer or R&D services provider and the intellectual property is used outside Taiwan, the fees paid are also deemed Taiwan sourced.

Cost-Sharing Arrangement For Research and Development (R&D) Expenses

When a Taiwan resident enterprise enters into an agreement with a non-resident enterprise, any income derived by the non-resident as a result of the agreement will not be deemed Taiwan sourced under the following conditions:

  • The developed intellectual property is jointly owned by the agreement participants;
  • The agreement participants are able to obtain reasonably anticipated benefits;
  • There are no payment of royalties involved; and
  • The agreement is not tax avoidance in nature.

E-commerce services

Income earned by a non-resident enterprise from provision of e-commerce services in Taiwan is deemed as Taiwan source income based on the economic nexus of the services to Taiwan. As per guidelines issued by the Ministry of Finance on 2 January 2018, e-commerce services will be deemed as Taiwan sourced income if:

  • The non-resident uses internet or other means to transfer the goods for downloading and storage into electronic devices in Taiwan, and the provision of e-commerce services requires assistance from domestic individuals or enterprises
  • The e-commerce services are deemed as “immediate,” “interactive,” “convenient” and “continuous” to domestic purchasers.
  • The e-commerce services involve use of internet or other electronic means to sell services that are physically used within Taiwan.
  • The services are with a non-resident entity’s digital platform.

Online advertisement fees

Where a Taiwan resident makes payment of advertising fees to a non-resident online platform service provider, any income derived by the non-resident is deemed as Taiwan source income.