(1) Interest 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 interest may also be taxed in the Contracting
State in which it arises and according to the laws of that State,
but if the beneficial owner of the interest is a resident of the other
Contracting State, the tax so charged shall not exceed 5 per cent
of the gross amount of the interest.
(3) Notwithstanding the provisions of paragraph 2,
a) interest arising in the Federal Republic of Germany and paid
to the Government of the Republic of Slovenia, the Bank of
Slovenia or the Slovenian Export Corporation and interest
paid in consideration of a loan guaranteed by the Slovenian
Export Corporation and interest paid in consideration of a
loan guaranteed by the Republic of Slovenia in respect of
export or foreign direct investment shall be exempt from
German tax;
b) interest arising in the Republic of Slovenia and paid to the
Government of the Federal Republic of Germany, the Deut-
sche Bundesbank, the Kreditanstalt für Wiederaufbau or the
Deutsche Investitions- und Entwicklungsgesellschaft (DEG)
and interest paid in consideration of a loan guaranteed by the
Federal Republic of Germany in respect of export or foreign
direct investment shall be exempt from Slovenian tax.
(4) The term “interest” as used in this Article means income
from debt-claims of every kind, whether or not secured by mort-
gage, and in particular, income from government securities and
income from bonds or debentures, including premiums and
prizes attaching to such securities, bonds or debentures. Penal-
ty charges for late payment shall not be regarded as interest for
the purpose of this Article.
(5) The provisions of paragraphs 1 and 2 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 State independent personal ser-
vices 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 case the
provisions of Article 7 or Article 14, as the case may be, shall
apply.
(6) Interest shall be deemed to arise in a Contracting State
when the payer is that State itself, a Land, a political subdivision,
a local authority or a resident of that State. Where, however, the
person paying the interest, whether he is a resident of a Contract-
ing State or not, has in a Contracting State a permanent estab-
lishment or a fixed base in connection with which the indebt-
edness on which the interest is paid was incurred, and such
interest is borne by such permanent establishment or fixed base,
then such interest 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 relationship between the
payer and the beneficial owner or between both of them and
some other person, the amount of the 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 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.