Dividends withholding cap limits source-state taxation to a reduced rate, subject to beneficial owner and permanent establishment exceptions. Dividends paid by a resident company may be taxed in the recipient's State of residence, while the source State may also tax such dividends subject to a limited withholding cap when the beneficial owner is resident of the other State. Dividends encompass income from shares and similar profit participating rights. The reduced source tax treatment is inapplicable 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 services apply; source States likewise may not tax undistributed profits arising in the other State.
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 withholding cap limits source-state taxation to a reduced rate, subject to beneficial owner and permanent establishment exceptions.
Dividends paid by a resident company may be taxed in the recipient's State of residence, while the source State may also tax such dividends subject to a limited withholding cap when the beneficial owner is resident of the other State. Dividends encompass income from shares and similar profit participating rights. The reduced source tax treatment is inapplicable 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 services apply; source States likewise may not tax undistributed profits arising in the other State.
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