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Double Taxation: OECD Model Convention
- 1.
- Dividends paid by a company which is a resident of a Contracting State
to a resident of the other Contracting State may be taxed in that other
State.
- 2.
-
However, such dividends may also be taxed in the Contracting State of
which the company paying the dividends is a resident and according to the
laws of that State, but if the beneficial owner of the dividends is a
resident of the other Contracting State, the tax so charged shall not
exceed:
- a)
- 5 per cent of the gross amount of the dividends if the beneficial
owner is a company (other than a partnership) which holds directly at
least 25 per cent of the capital of the company paying the
dividends;
- b)
- 15 per cent of the gross amount of the dividends in all other
cases.
The competent authorities of the Contracting States shall by mutual
agreement settle the mode of application of these limitations.
This paragraph shall not affect the taxation of the company in respect of
the profits out of which the dividends are paid.
- 3.
- The term »dividends« as used in this Article means income from shares,
»jouissance« shares or »jouissance« rights, mining shares, founders'
shares or other rights, not being debt-claims, participating in profits, as
well as income from other corporate rights which is subjected to the same
taxation treatment as income from shares by the laws of the State of which
the company making the distribution is a resident.
- 4.
- The provisions of paragraphs 1 and 2 shall not apply if the beneficial
owner of the dividends, being a resident of a Contracting State, carries on
business in the other Contracting State of which the company paying the
dividends is a resident through a permanent establishment situated therein
and the holding in respect of which the dividends are paid is effectively
connected with such permanent establishment. In such case the provisions of
Article 7 shall apply.
- 5.
- Where a company which is a resident of a Contracting State derives
profits or income from the other Contracting State, that other State may
not impose any tax on the dividends paid by the company, except insofar as
such dividends are paid to a resident of that other State or insofar as the
holding in respect of which the dividends are paid is effectively connected
with a permanent establishment situated in that other State, nor subject
the company's undistributed profits to a tax on the company's
undistributed profits, even if the dividends paid or the undistributed
profits consist wholly or partly of profits or income arising in such other
State.
© OECD: Last modified: 2003-04-09
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