Dividend withholding limits for cross-border payments: source state tax constrained while residence state retains taxing right.

Dividends paid to a resident of the other Contracting State may be taxed in the recipient's State; the source State where the paying company is resident may also tax those dividends, but where the recipient is the beneficial owner a withholding tax on the gross amount of dividends is limited to a specified maximum. The reduced withholding provisions do not apply where the beneficial owner carries on business in the source State through a permanent establishment or performs independent personal services from a fixed base there and the holding is effectively connected with that nexus.

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