ARTICLE 13

Royalties

(1) Royalties derived from sources within one of the Contracting States by a resident of other Contracting State may be taxed by both Contracting States.

(2) The rate of tax imposed by a Contracting State on royalties derived from sources within that Contracting State and beneficially owned by a resident of the other Contracting State shall not exceed 15 percent of the gross amount of royalties described in paragraph 3(a) and 10 percent of the gross amount of royalties described in paragraph 3(b).

(3) (a) The term "royalties" as used in this Article means payments of any kind made as consideration for the use of, or the right to use, copyrights of literary, artistic, or scientific works (including copyrights or motion pictures and films, tapes or other means of reproduction used for radio or television broadcasting), patents, designs, models, plans, secret processes or formula, trademarks, or for information concerning industrial, commercial or scientific experience. It also includes gains derived from the sale, exchange, or other dispositions of any such property or rights to the extent that the amounts realized on such sale, exchange or other disposition for consideration are contingent on the productivity, use, or disposition of such property or rights.

(b) The term "royalties" as used in this Article also includes payments by a resident of one of the Contracting States for the use of, or the right to use, industrial, commercial or scientific equipment, but not including ships, aircraft or containers the income from which is exempt from tax by the other Contracting State under Article 9 (Shipping and Air Transport).

(4) Paragraph (2) shall not apply if the recipient of the royalty, being a resident of one of the Contracting States, has in the other Contracting State a permanent establishment or fixed base and the property or rights giving rise to the royalty is effectively connected with such permanent establishment. In such a case the provisions of Article 8 (Business Profits) or Article 15 (Independent Personal Services) shall apply.

(5) Where any amount designated as a royalty paid to any related person exceeds an amount which would have been paid to an unrelated person, the provisions of this Article shall apply only to so much of the royalty as would have been paid to an unrelated person. In such a case the excess payment may be taxed by each Contracting State according to its own law, including the provisions of this Convention where applicable.