Dividend taxation rules: source state withholding limited when recipient is beneficial owner; residence state may tax dividends.

Dividends paid to a resident of the other Contracting State may be taxed in the recipient's State, but the source State may also tax such dividends; if the recipient is the beneficial owner, source tax is limited to 10 per cent of the gross amount. The limitation does not affect company taxation on profits. Dividend treatment includes income from shares and similar corporate rights. The reduced source taxation does not apply where the beneficial owner's holding is effectively connected with a permanent establishment or fixed base in the source State, in which case business profits or independent personal services provisions apply, and a State generally may not tax dividends or undistributed profits of a resident company derived from the other Contracting State except in those specified circumstances.

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