Artikel 11 Income from debt claims

Income from debt claims arising in a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in that other State.

The term ‘income from debt claims’ 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 income from a debt claim for the purpose of this Article.

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

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 income from a debt claim, 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.