Dividend taxation: source state may tax dividends but exceptions and connection rules protect non-resident beneficial owners' position. The Convention permits the recipient's State of residence to tax dividends but allows the source State to tax dividends paid by its resident companies subject to a source tax limitation when the beneficial owner resides in the other Contracting State. 'Dividends' include income from shares and similar corporate rights. Preferential source treatment 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 business profits or independent personal services rules govern. The Convention also restricts taxing of dividends and undistributed profits by the other State except in specified connected situations.