Document ID: chunk:federal_register_of_legislation:C2004A01208:clause:1_3
Version: federal_register_of_legislation:C2004A01208
Segment Type: clause
Provision Reference: sch 1 cl 3
Character Range: 34564–35485

3               Notwithstanding paragraph 2, interest arising in a Contracting State and beneficially owned by a resident of the other Contracting State may not be taxed in the first‑mentioned State if:

       (a) the interest is derived by a Contracting State or by a political or administrative sub‑division or a local authority thereof, or by any other body exercising governmental functions in a Contracting State, or by a bank performing central banking functions in a Contracting State; or

       (b) the interest is derived by a financial institution which is unrelated to and dealing wholly independently with the payer.  For the purposes of this Article, the term "financial institution" means a bank or other enterprise substantially deriving its profits by raising debt finance in the financial markets or by taking deposits at interest and using those funds in carrying on a business of providing finance.