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(1) Royalties arising in a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in that other State.
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(2) The term “royalties”, as used in this Article, means pay- ments 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 motion pictures or films, recordings on tape or other media used for radio or television broadcasting or other means of reproduction or transmission), any patent, trade mark, design or model, plan, secret formula or process, or for information con- cerning industrial, commercial or scientific experience. The term “royalties” shall also include payments of any kind received as a consideration for the use of or the right to use a person’s name, picture or any other similar personality rights, or the recording of entertainers’ or sportsmens’ performances by radio or television.
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(3) The provisions of paragraph 1 shall not apply if the beneficial owner of the royalties, being a resident of a Contract- ing State, carries on business in the other Contracting State in which the royalties arise through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
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(4) 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 he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.
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(5) 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 royalties, 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 pro- visions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall re- main taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.