Dividend taxation rules limit source state withholding for beneficial owners, with exceptions for permanent establishment connections. Dividends paid by a resident company to a resident of the other Contracting State may be taxed in the recipient's State, but the source State may also tax those dividends; if the recipient is the beneficial owner, source-state tax is limited to a withholding of ten per cent of the gross amount. The withholding limit 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 rules on business profits or independent personal services govern, and the other State generally may not tax dividends or undistributed profits arising from it except in specified connected circumstances.
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Provisions expressly mentioned in the judgment/order text.
Dividend taxation rules limit source state withholding for beneficial owners, with exceptions for permanent establishment connections.
Dividends paid by a resident company to a resident of the other Contracting State may be taxed in the recipient's State, but the source State may also tax those dividends; if the recipient is the beneficial owner, source-state tax is limited to a withholding of ten per cent of the gross amount. The withholding limit 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 rules on business profits or independent personal services govern, and the other State generally may not tax dividends or undistributed profits arising from it except in specified connected circumstances.
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