(1) Interest arising in a Contracting State and paid to a 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, even if they are secured by mortgage, 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 provision of paragraph (1) shall not apply if the beneficial owner of the interest, being a resident in 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 debt-claim for which the interest is paid is effectively connected with such permanent establishment or fixed base. In this case, the provisions of article 7 or article 14 shall apply.
(4) Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and a third party, the amount of the interest, calculated on 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.