(1) The interests arising in a Contracting State and paid to a resident of another Contracting State are taxable in that other State

(2) However, these interests may be imposed in the other Contracting State where they arise and according to the legislation of that State, but the tax thus established cannot exceed 10 percent of the gross value of interests.

(3) The term "interest" used in the present article means the income from debt-claims of every nature, whether or not secured by mortgage and whether or not carrying a right to participate in profits of debtor, and notably the income from Government securities, bonds or debentures, including the premium and prizes attached to such securities, bonds or debentures. The penalties for late payment are not considered as interest for the purposes of the present article.

(4) The provisions of paragraph (1) and (2) do not apply, when the beneficiary of interest, resident of a Contracting State, performs in another Contracting State from where the interest arises, either an industrial or commercial activity through a permanent establishment that is situated there, or a independent personal service by means of a fixed base which is located there, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In this case, the provisions of Article 7 or article 14 according to the case, are applicable.

(5) Interest shall be deemed to arise in a Contracting State when the payer is that Contracting State itself or a political sub-division, or a person resident in that State. However, where 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 fixed base in connection with which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, the interest shall be deemed to arise in the Contracting State in which the permanent establishment is located.

(6) 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 to the last mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.