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 also be taxed in the Contracting State in which it arises  and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 5 per cent of the  gross amount of the interest. The competent authorities of the Contracting States shall by  mutual agreement settle the mode of application of this limitation.  

3. Notwithstanding the provisions of paragraph 2, interest mentioned in paragraph 1  shall be taxable only in the Contracting State of which the recipient is a resident, if such  recipient is the beneficial owner of the interest and if such interest is paid to, or the loan in  respect of which the interest is paid, is made, guaranteed or insured by, the Government or  the National Bank of a Contracting State.

4. The term "interest" as used in this Article means income from debt-claims of every  kind, whether or not secured by mortgage and whether or not carrying a right to participate  in the debtor's profits, 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.  

5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the  interest, being a resident of a Contracting State, carries on business in the other  Contracting State in which the interest arises through a permanent establishment situated  therein and the debt-claim in respect of which the interest is paid is effectively connected  with such permanent establishment. In such case the provisions of Article 7 shall apply.  

6. Interest shall be deemed to arise in a Contracting State when the payer is 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 State in which the permanent establishment is situated.  

7. Where, by reason of a special relationship between the payer and the beneficial  owner or between both of them and some other person, the amount of the interest, 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 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 Convention.