Royalties taxation: source state may impose a limited withholding tax while residence state may also tax; PE nexus shifts taxation to business profits. Royalties paid to a resident of the other Contracting State may be taxed in the recipient's State, while the source State may also tax those royalties subject to a cap. Royalties include payments for use of intellectual property, equipment, and technical information. If the recipient carries on business in the source State through a permanent establishment or fixed base and the royalty is effectively connected, business profits provisions apply instead. Royalties are sourced to the payer's State or to the State of the permanent establishment that incurred the liability. Where related party arrangements inflate royalties, only the arm's length amount is governed by the Article.