(1) Interest arising in a Contracting State and beneficially owned by the resident of the other Contracting State shall be taxable only in that other State.
(2) The term "interest" as used in this Article means income from debt-claims 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 and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
(3) The provisions of paragraph (1) shall not apply if the recipient 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 the other State independent personal services from a fixed place situated therein and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed place. In such case the provisions of Article 8 or Article 15 of this Agreement shall apply.
(4) 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 place 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 place, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed place is situated.
(5) Where, by reason of a special relationship between the payer and the recipient 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 recipient 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.