Royalty withholding limits restrict source-state taxation, subject to beneficial owner status and permanent establishment connection rules. Royalties paid to a resident of the other Contracting State may be taxed in that other State, while the source State may also tax such royalties subject to a withholding cap when the recipient is the beneficial owner; permanent establishment or fixed base connections supplant the withholding rule and arm's length adjustment limits the Article's application where special relationships inflate payments.