(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 laws of that
State, but if a resident of the other Con-
tracting State is the beneficial owner of the
royalties the tax so charged shall not
exceed 10 per cent of the gross amount of
the royalties.
(3) Notwithstanding the provisions of
paragraph 2, royalties arising in a Contract-
ing State and paid to a resident of the other
Contracting State who is the beneficial
owner of the royalties shall be taxable only
in that other State if they are:
a) copyright royalties and other like pay-
ments in respect of the production or
reproduction of any literary, dramatic,
musical or artistic work (but not includ-
ing royalties in respect of motion pic-
ture films nor royalties in respect of
works on film or videotape or other
means of reproduction for use in con-
nection with television broadcasting);
b) royalties for the use of, or the right to
use, computer software or any patent
or for information concerning industrial,
commercial or scientific experience
(but not including any such royalty pro-
vided in connection with a rental or
franchise agreement).
(4) The term “royalties” as used in this
Article means payments of any kind re-
ceived as a consideration for the use of, or
the right to use, any copyright, patent,
trade mark, design or model, plan, secret
formula or process or other intangible
property, or for the use of, or the right to
use, industrial, commercial or scientific
equipment, or for information concerning
industrial, commercial or scientific experi-
ence, and includes payments of any kind in
respect of motion picture films and works
on film, videotape or other means of repro-
duction for use in connection with televi-
sion.
(5) The provisions of paragraphs 1 to 3
shall not apply if the beneficial owner of the
royalties, being a resident of a Contracting
State, carries on business in the other Con-
tracting State in which the royalties arise,
through a permanent establishment situ-
ated therein, or performs in that other State
independent personal services from a fixed
base situated therein, and the right or prop-
erty in respect of which the royalties are
paid is effectively connected with such per-
manent establishment or fixed base. In
such case the provisions of Article 7 or Arti-
cle 14, as the case may be, shall apply.
(6) Royalties shall be deemed to arise in
a Contracting State when the payer is a
resident of that State. Where, however, the
person paying the royalties, whether the
payer 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 obligation to pay the royal-
ties 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.
(7) Where, by reason of a special rela-
tionship between the payer and the benefi-
cial owner or between both of them and
some other person, the amount of the roy-
alties, having regard to the use, right or
information for which they are 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 such case, the excess part of
the payments shall remain taxable accord-
ing to the laws of each Contracting State,
due regard being had to the other provi-
sions of this Agreement.