Article 10 - Dividends

Dividend taxation limits: source-state tax on cross-border dividends capped; exceptions apply for permanent establishments and connected holdings.

Taxation of cross-border dividends is shared: dividends paid by a resident company to a resident of the other State may be taxed in the recipient's State and also in the source State subject to a tax ceiling where the recipient is the beneficial owner. The Article defines dividends to include income from shares and similar profit-participating corporate rights. The source-State cap varies by ownership level and does not affect taxation of the company on profits. Where the beneficial owner has a permanent establishment or fixed base in the source State and the holding is effectively connected, rules on business profits or independent personal services govern instead; the source State generally may not tax dividends or undistributed profits unless the recipient is resident there or the holding is effectively connected.