Article 10 - Dividends

Cross-border dividend taxation capped at 10 percent when beneficial owner resident in other state, with permanent establishment exception

Dividends paid by a company resident in one contracting state to a resident of the other may be taxed in the recipient's state, but the source state may also tax them, capped at 10% of the gross amount where the beneficial owner is a resident of the other state. 'Dividends' covers income from shares and other profit-participating rights, excluding debt-claims, and equivalent income treated as dividends under domestic law. The reduced withholding does not apply when the dividends are effectively connected with a permanent establishment or fixed base in the source state; in such cases, business profits or independent personal services rules apply. A state may not tax dividends or undistributed profits of a non-resident company except where dividends are paid to its residents or linked to a local permanent establishment or fixed base.