Dividend taxation rules limit source State withholding where the beneficial owner qualifies, with PE connection altering tax treatment.

Taxation of dividends allocates taxing rights to the recipient's State while allowing the company's State of residence to tax dividends subject to ceilings where the recipient is the beneficial owner; lower and higher ceilings apply depending on the recipient's ownership status. The Article defines dividends broadly, excludes dividend rules where holdings are effectively connected with a permanent establishment or fixed base (in which case business profits or independent personal services rules apply), and restricts the source State from taxing dividends to nonresidents or the company's undistributed profits except in specified connected or resident cases.

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