11
Article 12
Royalties
1. Royalties 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 royalties may also be taxed in the Contracting State in which they arise and
according to the laws of that State, but if the recipient is the beneficial owner of the royalties, the
tax so charged shall not exceed 10 per cent of the gross 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 received as a
consideration for the use of, or the right to use, any copyright of literary, artistic or scientific
work including cinematograph films, or films or tapes used for radio or television broadcasting,
any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the
right to use, industrial, commercial or scientific equipment, or for information concerning
industrial, commercial or scientific experience.
4. The provisions of paragraphs 1 and 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 Contracting 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 with such
permanent establishment or fixed base. In such case the provisions of Article 7 or Article 15, as
the case may be shall apply.
5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that
Contracting 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 or a fixed base in
connection with which the liability to pay the royalties was incurred, and such royalties are borne
by such permanent establishment or fixed base, then such royalties shall be deemed to arise in
the Contracting State in which the permanent establishment is situated.
6. 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 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 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.