Dividends taxation cap limits source-state withholding to a low rate when recipient is resident; PE-connected holdings excluded. Dividends paid to a resident of the other Contracting State may be taxed in the recipient's State, while the source State may also tax such dividends but must limit tax to ten per cent of the gross amount when the recipient is the beneficial owner and resident of the other State. The limitation does not apply where the beneficial owner has a permanent establishment or fixed base in the source State and the holding is effectively connected, in which case business profits or independent personal services provisions govern, and the source State generally may not tax dividends or undistributed profits except in those specific circumstances.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Dividends taxation cap limits source-state withholding to a low rate when recipient is resident; PE-connected holdings excluded.
Dividends paid to a resident of the other Contracting State may be taxed in the recipient's State, while the source State may also tax such dividends but must limit tax to ten per cent of the gross amount when the recipient is the beneficial owner and resident of the other State. The limitation does not apply where the beneficial owner has a permanent establishment or fixed base in the source State and the holding is effectively connected, in which case business profits or independent personal services provisions govern, and the source State generally may not tax dividends or undistributed profits except in those specific circumstances.
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