Interest taxation: source state may tax cross-border interest but a reduced cap applies when beneficial owner resides abroad. Taxation of cross-border interest grants primary taxing rights to the recipient's residence State while permitting source-State taxation subject to a cap when the beneficial owner resides in the other Contracting State. Exemptions apply for interest beneficially owned by the government and designated public financial institutions. Interest is defined broadly as income from debt-claims, excludes penalties, and is deemed to arise in the payer's State or where a permanent establishment or fixed base bearing the interest is situated. Interest connected to a permanent establishment or fixed base is taxed under business profits or independent services rules, and related-party excess interest is limited to an arm's-length amount.