Interest taxation limited for nonresident beneficial owners, with exemptions and permanent establishment linkage affecting source taxation. Interest paid to a resident of the other Contracting State may be taxed in that resident State and also in the source State, but when the beneficial owner is resident of the other State the source State's tax on such interest is limited; certain public authorities and agreed institutions are exempt from source taxation. Interest is defined broadly as income from debt claims excluding penalty charges. If the beneficial owner's permanent establishment or fixed base in the source State is effectively connected with the debt, taxation follows the rules for business profits or independent personal services. Special-relationship excess interest is limited to arm's-length amounts for treaty application.