(1) Royalties arising in a Contracting State which are
derived by a resident of the other Contracting State may
be taxed in that other Contracting State.
(2) However, such royalties may also be taxed in the
Contracting State in which they arise and according to
the law of that Contracting State, but the tax so charged
shall not exceed 10 per cent of the gross amount of the
royalties.
(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, commer-
cial, or scientific equipment, or for information concern-
ing industrial, commercial or scientific experience.
(4) The provisions of paragraphs (1) and (2) shall not
apply if the recipient of the royalties, being a resident of
a Contracting State, has in the other Contracting State in
which the royalties arise a permanent establishment with
which the right or property giving rise to the royalties is
effectively connected. In such a case, the provisions of
Article 7 shall apply.
(5) Royalties shall be deemed to be derived from a
Contracting State when the payer is that State itself, a
Land, a political subdivision or a local authority thereof
or a resident of that State. Where, however, the person
paying the royalties, whether he is a resident of a Con-
tracting State or not, has in a Contracting State a perma-
nent 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 be derived from the Con-
tracting State in which the permanent establishment is
situated.
(6) Where, owing to a special relationship between the
payer and the recipient or between both of them and
some other person, the amount of the royalties paid,
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 recipient in the
absence of such relationship, the provisions of this Arti-
cle 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
Agreement.
(7) The foregoing provisions of paragraphs (1), (2), (4).
(5) and (6) shall likewise apply to payments received as
a consideration for the provision of management or tech-
nical services. If a resident of a Contracting State so
elects for any year of assessment, the tax chargeable in
the other Contracting State on such payments shall be
calculated as if he had a permanent establishment in that
other State to which such payments were attributable.