Interest taxation: limited source-state withholding on cross-border interest with exemptions for government and designated financial institutions.

Article 11 limits source-state taxation of cross-border interest where the recipient is the beneficial owner, sets a maximum charge by the source State, and exempts interest taxable solely in the recipient State when derived or beneficially owned by governments, central banks or designated government-owned financial institutions or by residents with government-guaranteed or indirectly financed debt-claims. Interest is broadly defined as income from debt-claims; taxation is displaced where the beneficial owner's interest is effectively connected with a permanent establishment or fixed base, in which case provisions for business profits or independent personal services apply.

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