ARTICLE VII

Interest

(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 be taxed in the Contracting State in which it arises, according to the law of that State, but the tax so charged shall not exceed 10 per cent of the amount of the interest.

(3) Interest arising in the Kingdom of Greece and paid to the Deutsche Bundesbank or to the Kreditanstalt fur Wiederaufbau in the Federal Republic of Germany shall be exempt from Greek tax. Interest arising in the Federal Republic of Germany and paid to the Bank of Greece shall be exempt from Federal Republic tax.

(4) The term "interest" as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and debt-claims of every kind as well as all other income assimilated to income from money lent by the taxation law of the State in which the income arises.

(5) Paragraphs (1) and (2) shall not apply where a resident of a Contracting State carries on a trade or business in the other Contracting State through a permanent establishment situated therein and such interest is attributable to that permanent establishment; in such event Article III of this Agreement is applicable.

(6) Interest shall be deemed to arise in a Contracting State when the payer is that State itself, 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 Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

(7) Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the interest paid, 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 that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement.

(8) This Article shall not be construed to restrict any exemption, deduction or other allowance now or hereafter accorded, by the laws of the Kingdom of Greece, in the determination of Greek tax on interest arising in the Kingdom of Greece and paid to a resident of the Federal Republic of Germany.