Article 11Interest
(1) Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State.
(2) However, interest arising in a Contracting State may also be taxed in that Contracting State according to the laws of that Contracting State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.
(3) Notwithstanding the provisions of paragraph 2 of this Article, interest arising in a Contracting State shall be exempt from tax in that Contracting State provided it is derived and beneficially owned by:
a) in the case of the Slovak Republic:
(i) the Government of the Slovak Republic,
(ii) the local authorities,
(iii) Národná banka Slovenska (the National Bank of Slovakia),
(iv) Eximbanka SR (Export-Import Bank of the Slovak Republic),
(v) Slovenská záručná a rozvojová banka, a. s., (Slovak Guarantee and Development Bank),
(vi) Agentúra pre riadenie dlhu a likvidity (Debt and Liquidity Management Agency);
b) in the case of Albania:
(i) the Government of the Republic of Albania,
(ii) the local authorities,
(iii) Banka e Shqipërisë (the National Bank of Albania).
(4) 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.
(5) The provisions of paragraphs 1, 2 and 3 of this Article 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 and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.
(6) Interest shall be deemed to arise in a Contracting State when the payer is a resident of that Contracting 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 in connection with which the indebtedness on which the interest is paid was incurred, and such interest is