Royalties, as a kind of taxable income under Chinese taxation treaties, refers to a payment to an owner for the use of, or the right to use, intellectual property, know-how and ICSE. As the most important resource of international tax law, the double taxation treaties between China and the other contacting countries shall stipulate accurate and detailed rules to define the nature of different intangible property transactions. However, the existing rules display a high level of vagueness and uncertainty, which constitutes not only a significant impediment to the function of double taxation treaties as to promote fairness and eliminate double taxation, and also a negative influence on international intangible investment. To improve the current rules, the principle of“the nature over form”shall be followed closely.