DT6910 - DT: Falkland Islands: double taxation agreement, Article 11: Interest

(1) Interest arising in a territory and paid to a resident of the other territory shall be taxable only in that other territory if such resident is the beneficial owner of the interest.

(2) The term "interest" as used in this Paragraph 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. The term "interest" shall not include any item which is treated as a dividend under the provisions of Paragraph 10 of this Arrangement.

(3) The provisions of sub-paragraph (1) of this Paragraph shall not apply if the beneficial owner of the interest, being a resident of a territory, carries on business in the other territory in which the interest arises, through a permanent establishment situated therein, or performs in that other territory 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 Paragraph 7 or Paragraph 14 of this Arrangement, as the case may be, shall apply.

(4) 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 paid exceeds, for whatever reason, 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 Paragraph shall apply only to the last-mentioned amount. In such case, the excess part of the payment shall remain taxable according to the law of each territory, due regard being had to the other provisions of this Arrangement.

(5) The provisions of this Paragraph shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the debt-claim in respect of which the interest is paid to take advantage of this Paragraph by means of that creation or assignment.