8
6. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a
political or administrative subdivision, a local authority or a resident of that State. Where, however,
the person paying the interest, whether he is a resident of a Contracting State or not, has in a
Contracting State a permanent establishment or a fixed base in connection with which the
indebtedness on which the interest is paid was incurred, and such interest is borne by such
permanent establishment or fixed base, then such interest shall be deemed to arise in the
Contracting State in which the permanent establishment or fixed base is situated.
7. Where, by reason of a special relationship between the payer and the beneficial owner or between
both of them and some other person, the amount of the interest, having regard to the debt- claim for
which it is paid exceeds the amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the provisions of this Article shall apply only
to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable
according to the law of each Contracting State, due regard being had to the other provisions of this
Convention.
Article 12 - Royalties
1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may
be taxed in that other State.
2. However, such royalties may also be taxed in the Contracting State in which they arise, and
according to the law of that State, but if the recipient is the beneficial owner of the royalties, the tax
so charged shall not exceed 15% of the gross amount of the royalties. The competent authorities of
the Contracting States shall by mutual agreement settle the mode of application of this limitation.
3. The term "royalties" as used in this Article means payments of any kind received as a
consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work
including cinematograph films or tapes for television or broadcasting, any patent, trade mark,
design or model, plan, secret formula or process or for the use of or the right to use industrial,
commercial or scientific equipment or for information concerning industrial, commercial or
scientific experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties,
being a resident of a Contracting State, carries on business in the other Contracting State in which
the royalties arise through a permanent establishment situated therein or performs in that other State
independent personal services from a fixed base situated therein, and the right or property in respect
of which the royalties are paid is effectively connected with such permanent establishment or fixed
base. In such a case the royalties are taxable in that other Contracting State according to its own
law.
5. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a
political or administrative subdivision a local authority or a resident of that State. Where, however,
the person paying the royalties whether he is a resident of a Contracting State or not, has in a
Contracting State a permanent establishment or a fixed base in connection with which the liability
to pay the royalties was incurred and such royalties are borne by such permanent establishment or
fixed base, then such royalties shall be deemed to arise in the State in which the permanent
establishment or fixed base is situated.