Royalties withholding limited where beneficial owner is resident, with source-state tax subject to treaty cap and permanent establishment exceptions. Royalties paid to a resident of the other Contracting State may be taxed in both States, but where the beneficial owner is resident in the other State the source State's tax on royalties is limited by a treaty withholding ceiling. Royalties are broadly defined to include payments for use of copyrights, films, patents, trademarks, designs, equipment, and technical information. Exceptions to the withholding limit apply when royalties are effectively connected with a permanent establishment or fixed base in the source State, where Articles on business profits or independent personal services govern. Payments between related parties are limited to arm's length amounts for treaty purposes.