Dividend taxation limits permit source-state withholding subject to reduced treaty rates when the beneficial owner qualifies.

Dividends paid by a resident company may be taxed in the recipient's State, but the payer's State may also levy tax subject to reduced withholding when the recipient is the beneficial owner; lower withholding applies where the beneficial owner is a company holding a substantial direct shareholding, and a higher reduced rate applies otherwise. The definition of dividends covers income from shares and similar corporate rights. Withholding limits do not apply if the beneficial owner's holding is effectively connected to a permanent establishment or fixed base in the payer's State, in which case business profits or independent services rules govern.

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