| 1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in both Contracting States. |
| 2. 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, 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, or for the performance of technical or commercial assistance services which are incidental to the use of such goods or rights, to the extent that the services are performed in the Contracting State in which the royalties arise. |
3. Notwithstanding the provision of paragraph 1, royalties arising in a Contracting State and paid to a resident of the other Contracting State shall be exempt from tax in the first-mentioned Contracting State, if they are paid as consideration for —| (a) | the use of, or the right to use, any —| (i) | copyright of scientific work, patent, design or model, plan, secret formula or process or trade mark; | | (ii) | industrial, commercial or scientific equipment; |
| | (b) | the supply of scientific, technical or industrial knowledge, information or assistance. |
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| 4. The provision of paragraph 3 shall not apply if the recipient of the royalties, being a resident of a Contracting State has in the other Contracting State in which the royalties arise a permanent establishment with which the right or property giving rise to the royalties is effectively connected. In such a case, the royalties may be taxed according to the law of that other Contracting State. |
| 5. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority, a statutory body or a resident of 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 directly borne by such permanent establishment, then such royalties shall be deemed to arise in 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 provision of paragraph 3 shall apply only to the last-mentioned amount. |
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