ARTICLE 11
Interest
1. Interest arising in a Contracting State and beneficially owned by a resident of the other
Contracting State shall be taxable only in that other State.
2. Notwithstanding the provisions of paragraph 1:
(a) interest arising in a Contracting State that is determined with reference to the
profits of the issuer or of one of its associated enterprises, as defined in subparagraph (a)
or (b) of paragraph 1 of Article 9 (Associated Enterprises), and paid to a resident of the
other Contracting State may be taxed in that other State;
(b) 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 is a resident of
the other Contracting State, the gross amount of the interest may be taxed at a rate not
exceeding the rate prescribed in subparagraph (b) of paragraph 2 of Article 10
(Dividends).
3. The term "interest" means income from indebtedness of every kind, whether or not secured
by mortgage, and whether or not carrying a right to participate in the debtor’s profits, and in
particular, income from government securities and income from bonds or debentures, including
premiums or prizes attaching to such securities, bonds, or debentures, as well as other income
that is treated as income from money lent by the taxation law of the Contracting State in which
the income arises. However, the term "interest" does not include income dealt with in Article 10
(Dividends). Penalty charges for late payment shall not be regarded as interest for the purposes of
the Convention.
4. 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 services from a fixed base situated therein, and the interest is
attributable to such permanent establishment or fixed base. In such case the provisions of Article
7 (Business Profits) or Article 14 (Independent Personal Services), as the case may be, shall
apply.
5. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that
State. Where, however, the person paying the interest, 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 indebtedness 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.
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 interest, having regard to the
debt-claim for which it is paid, exceeds the amount that 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 Convention.