Withholding tax on dividends limited by treaty, with source-state taxation only when beneficial owner has effective connection. Dividends paid across Contracting States are taxable in the recipient's State, while the payer's State may also tax such dividends subject to a treaty limit when the recipient is the beneficial owner. The treaty excludes the source-state limit where the beneficial owner's holding is effectively connected with a permanent establishment or fixed base in the payer State, in which case Articles 7 or 14 apply. The treaty also restricts a State from taxing dividends of its resident company derived from the other State except for dividends paid to its own residents or where an effective connection exists, and bars taxation of undistributed profits on that basis.
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.
Withholding tax on dividends limited by treaty, with source-state taxation only when beneficial owner has effective connection.
Dividends paid across Contracting States are taxable in the recipient's State, while the payer's State may also tax such dividends subject to a treaty limit when the recipient is the beneficial owner. The treaty excludes the source-state limit where the beneficial owner's holding is effectively connected with a permanent establishment or fixed base in the payer State, in which case Articles 7 or 14 apply. The treaty also restricts a State from taxing dividends of its resident company derived from the other State except for dividends paid to its own residents or where an effective connection exists, and bars taxation of undistributed profits on that basis.
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