Dividends taxation: source-state withholding on cross-border dividends is limited while connection to a permanent establishment shifts taxation. The Article allocates taxing rights over dividends: the recipient's State may tax dividends, while the source State may also tax them but subject to a treaty-prescribed maximum withholding rate where the beneficial owner is a resident of the other State. The definition of dividends covers share income and similar profit-participating rights. The preferential withholding rules do 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 rules for business profits or independent personal services govern, and the Article prevents taxation of undistributed profits by the other State except in limited connected circumstances.
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.
Dividends taxation: source-state withholding on cross-border dividends is limited while connection to a permanent establishment shifts taxation.
The Article allocates taxing rights over dividends: the recipient's State may tax dividends, while the source State may also tax them but subject to a treaty-prescribed maximum withholding rate where the beneficial owner is a resident of the other State. The definition of dividends covers share income and similar profit-participating rights. The preferential withholding rules do 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 rules for business profits or independent personal services govern, and the Article prevents taxation of undistributed profits by the other State except in limited connected circumstances.
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