Taxation of cross-border interest: source taxing rights limited where recipient is beneficial owner, exemptions for public financial institutions. The DTAA permits residence-state taxation of interest while allowing source-state taxation subject to a limited withholding tax when the recipient is the beneficial owner. Certain government and specified financial institutions are exempt from source taxation if they beneficially own the interest, and the competent authorities may agree additional exempt institutions. Interest is defined to include income from all debt-claims (excluding penalty charges), is deemed to arise where the payer or the payer's permanent establishment or fixed base is situated, and interest effectively connected with a permanent establishment or fixed base is taxed under the rules for business profits or independent personal services. Special-relationship adjustments limit taxation to an arm's-length amount.