(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 the beneficial owner of the royalties is a
resident of the other Contracting State, the tax so charged shall
not exceed 10 per cent of the gross amount of the royalties. The
competent authorities of the Contracting States shall by mutual
agreement settle the mode of application of this limitation.
(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, any patent, trade mark,
design or model, plan, secret formula or process, or for the use
of, or the right to use, industrial, commercial, or scientific
equipment, or for information concerning industrial, commercial
or scientific experience. The term “royalties” also includes gains
derived from the alienation of any such right or property which
are contingent on the productivity or use thereof. The term
“royalties” shall also include payments of any kind for the use or
the right to use a person’s name, picture or any other similar
personality rights and on payments received as consideration
for the registration of entertainers’ or sportspersons’ performances
by radio or television.
(4) The provisions of paragraphs 1 and 2 shall not apply if the
beneficial owner of the royalties, being a resident of a
Contracting State, carries on business in the other Contracting
State in which the royalties arise, through a permanent
establishment situated therein, or performs in that other State
independent personal services from a fixed base situated
therein, and the right or property in respect of which the royalties
are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of
Article 7 or Article 14, as the case may be, shall apply.
(5) 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 or a fixed base in connection with which the
liability to pay the royalties was incurred, and such royalties are
borne by such permanent establishment or a fixed base, then
such royalties shall be deemed to arise in the Contracting State
in which the permanent establishment or a fixed base is
situated.
(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 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
provisions of this Article shall apply only 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 Agreement.