Article 12 Interest
     1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
     2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 12 per cent of the gross amount of the interest.
     3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State if:
a) the payer of the interest is that State itself, or a political subdivision or a local authority thereof, or the central bank of that State, or
b) the interest is paid to the other Contracting State or a political subdivision, or a local authority thereof, or to an institution (including financial institutions) owned or controlled by that Contracting State or to any of its local collectivities, or
c) the interest is paid to other institutions in respect of loans on preferential terms, for a period of three years or more, guaranteed or insured by the Government of the other Contracting State, the central bank of the other Contracting State or any agency or instrumentality (including a financial institution) owned or controlled by the Government of the other Contracting State, or
d) the interest is paid in connection with the importation of machine, or industrial, commercial or scientific equipment.
     4. The provisions of subparagraph c) of paragraph 3 shall in any case apply, in the case of the Netherlands, to the Netherlands Development Finance Company (Nederlandse Financieringsmaatschappij voor Ontwikkelingslanden NV) and the Netherlands Investment Bank for developing countries (Nederlandse Investeringsbank voor Ontwikkielingslanden NV) and, in the case of Argentina, to the Banco de la Nacion Argentina and the Banco de la Provincia de Buenos Aires. The competent authorities may, by mutual agreement, designate other agencies or instrumentalities to which these provisions shall in any case apply.
     5. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of paragraphs 2 and 3.
     6. The term "interest" as used in this Article means income from debt claims of every kind, whether or not secured by mortgage, and whether or not carrying a right to participate in the debtor's profits, and in particular income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.
     7. The provisions of paragraphs 1, 2, and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein and the debt- claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 15, as the case may be, shall apply.
     8. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
     9. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.