Dividend taxation limits source-state withholding for nonresident beneficial owners, with permanent establishment connections as key exceptions.

Taxation of cross-border dividends is split between the recipient's residence State and the payer company's residence State, with the source State permitted to tax dividends paid to non-resident beneficial owners subject to reduced withholding limits where treaty conditions are met. "Dividends" encompasses income from shares and similar profit-participating rights under the payer State's law. Treaty withholding limits do not apply where the beneficial owner's holding is effectively connected to a permanent establishment or fixed base in the payer State, in which case rules on business profits or independent personal services govern.

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