(1) Interest arising in a Contracting State and paid to a person who is a resident of the other Contracting State may be taxed only in that other State, if that person is the beneficial owner.

(2) The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profit, and in particular, income from government securities and income from bonds or debentures, including premiums and prices attaching to such securities, bond or debentures. Penalty charges for late payment shall not be regarded as interest for the purposes of this Article. The term "interest" does not include the income referred to in Article 10.

(3) The provisions of paragraph (1) shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other Contracting State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 7 or Article 14, as the case may be, shall apply.

(4) Where, by reason of a special relationship between the payer and the beneficial owner or between either of them and a third party, the monthly 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 latter amount. In such case, the excess part of the payments shall remain taxable according to the law of each Contracting State and with due regard to the other provisions of this Agreement.