Dividend taxation limits source-state withholding on cross-border dividends but preserves taxing rights where holdings are effectively connected. Dividends paid by a resident company of one Contracting State to a resident of the other State may be taxed in the recipient's State, while the source State may also tax those dividends subject to a ceiling where the beneficial owner is resident in the other State. The definition of dividends includes income from shares and similar profit-participating rights. The source-state limitation does not apply if 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 rules apply.
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.
Dividend taxation limits source-state withholding on cross-border dividends but preserves taxing rights where holdings are effectively connected.
Dividends paid by a resident company of one Contracting State to a resident of the other State may be taxed in the recipient's State, while the source State may also tax those dividends subject to a ceiling where the beneficial owner is resident in the other State. The definition of dividends includes income from shares and similar profit-participating rights. The source-state limitation does not apply if 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 rules apply.
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