Interest taxation: source-state tax limited when beneficial owner is resident, with exemptions and PE connection rules.

Article 11 permits taxation of interest in the recipient's State while allowing the source State to tax such interest subject to a capped source tax when the beneficial owner is resident in the other State; specified public bodies and agreed institutions are exempt. Interest is defined as income from debt claims (excluding late-payment penalties). Interest effectively connected to a permanent establishment or fixed base is treated as arising in the State of that establishment and governed by Articles 7 or 14. Amounts exceeding arm's-length interest due to special relationships are taxable only to the arm's-length portion under the Article.

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