Document ID: chunk:federal_register_of_legislation:C2008A00102:schedule:6:p16
Version: federal_register_of_legislation:C2008A00102
Segment Type: schedule
Provision Reference: sch 6 (pt 16/39)
Character Range: 40754–43437

which the indebtedness on which the interest is paid were incurred, and such interest is borne by such permanent establishment, then:

a)  if the permanent establishment is situated in a Contracting State, such interest shall be deemed to arise in that Contracting State; and

b)  if the permanent establishment is situated in a state other than the Contracting States, such interest shall not be deemed to arise in either Contracting State.

8.  Where, by reason of a special relationship between the payer and the beneficial owner of the interest, or between both of them and some other person, the amount of the interest, having regard to the debt‑claims or other rights for which it is paid, exceeds the amount which might have been expected to 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 law of each Contracting State, due regard being had to the other provisions of this Convention.

9.  A resident of a Contracting State shall not be considered the beneficial owner of the interest arising in the other Contracting State in respect of a debt‑claim or other right if such debt‑claim or other right might not have been expected to have been established unless a person:

a)  that is not entitled to benefits with respect to the interest arising in that other Contracting State which are equivalent to, or more favourable than, those available under this Convention to a resident of the first‑mentioned Contracting State; and

b)  that is not a resident of either Contracting State,

owned an equivalent debt‑claim or other right against the first‑mentioned resident.

10.  No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the assignment of the interest, the creation or assignment of the debt‑claim or other rights in respect of which the interest is paid, or the establishment, acquisition or maintenance of the company which is the beneficial owner of the interest or the conduct of its operations to take advantage of this Article.

Article 12

ROYALTIES

1.  Royalties arising in a Contracting State and beneficially owned by a resident of the other Contracting State may be taxed in that other Contracting State.

2.  However, such royalties may also be taxed in the Contracting State in which they arise and according to the law of that Contracting State, but the tax so charged shall not exceed 5 per cent of the gross amount of the royalties.

3.  The term "royalties" as