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Note: This Treaty may be impacted by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). MLI impact on Tax Treaties is available with the Orbitax International Tax Research & Compliance Expert.

ARTICLE 12

Royalties

(1) Royalties arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable in that other State.

(2) However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, if the person receiving the royalties is their beneficial owner, the tax so charged shall not exceed 18 percent of the total amount of the royalties. The competent authorities of the Contracting States shall, by mutual agreement, settle the mode of application of this limitation.

(3) The term "royalties" as used in this Article means payments of any kind derived for the use or right to use a patent, trademark, design or model of a plan or any industrial or scientific equipment or for information relating to an experience in the field of industry or science as well as any copyright of literary, artistic or scientific work including cinematograph films and films and recordings for televised and radio transmission.

(4) The provisions of paragraphs (1) and (2) of this Article shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on an industrial or commercial activity in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected therewith. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

(5) The royalties are deemed to arise in a Contracting State in case the payer is that State itself, a local authority (local collectivity) thereof, or another resident of that State. In case the payer of the royalties whether a resident of a Contracting State or not has a permanent establishment or a fixed base in a Contracting State for which the contract giving rise to the payment of the royalties has been entered and which as such incurs the charge thereof, such royalties 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 third parties, the amount of the royalties, having regard to the service for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of similar relationships, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess fraction of the payments shall remain taxable in accordance with the laws of each Contracting State, due regard being had to the other provisions of this Convention.