(1) Royalties derived from a Contracting State by a resident of the other Contracting State may be taxed in that other State.
(2) However, such royalties may be taxed in the Contracting State from which they are derived and according to the law of that State, but the tax so charged shall not exceed:
- (a) 20 per cent of the gross amount of such payments if they are made as consideration for the use of, or the right to use, any copyright, excluding cinematograph films or tapes for television or broadcasting, or any trademark (trade name);
- (b) 10 per cent of the gross amount of such payments in all other cases.
(3) The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright, patent, trademark (trade name), design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial, or scientific equipment, for information concerning industrial, commercial or scientific experience, or for the use of, or the right to use, cinematograph films or tapes for television or broadcasting, but does not include any payment dealt with in Article 6.
(4) The provisions of paragraph (1) and (2) shall not apply if the recipient of the royalties, being a resident of a Contracting State, has in the other Contracting State a permanent establishment with which the right or property giving rise to the royalties is effectively connected. In such a case, the provisions of Article 7 shall apply.
(5) Royalties shall be deemed to be derived from a Contracting State when the payer is that State itself, a Land, a political subdivision or a local authority thereof or a resident of that State or when the right or property giving rise to the royalties is used in that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to be derived from the Contracting State in which the permanent establishment is situated.
(6) 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 royalties paid, having regard to the use, right or information for which they are 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.