1. Royalties arising in a Contracting State and beneficially owned by a resident of the other Contracting State may be taxed by both Contracting States.
2. However, the tax imposed by the first mentioned Contracting State shall not exceed 5 percent of the gross amount of the royalties.
3. The term "royalties" as used in this Convention means payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, artistic, or scientific work including royalties in respect of motion pictures and works on film, tape or other means of reproduction for use in connection with radio or television, any patent, trademark, design or model, plan, secret formula or process, or other like right or property, or for information concerning industrial, commercial or scientific experience. The term royalties also includes gains derived from the alienation of any such right or property which are contingent on the productivity, use, or disposition thereof.
4. The provisions of paragraph 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business 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, an the royalties are attributable to such permanent establishment or fixed base. In such case the provisions of Article 7 (Business Profits) or Article 14 (Independent personal Services), as the case may be, shall apply.
5. Where, by reason of a special relationship between the payor and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right, or information for which they are paid, exceeds the amount which would have been agreed upon by the payor and the beneficial owner 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 laws of each Contracting State, due regard being had to the other provisions of the Convention.
6. Royalties shall be deemed to arise in a Contracting State to the extent that such royalties are with respect to the use of, or the right to use, rights or property within that State.
