Article 11 - Dividends

Dividend taxation limits restrict source-state withholding on cross-border dividends, subject to beneficial ownership and permanent establishment exceptions.

Cross-border dividends may be taxed in the recipient's State, but the source State may also tax them subject to prescribed withholding limits when the recipient is the beneficial owner; these limits do not affect taxation of the payer's profits. The definition of dividends includes income from shares and similar profit-participating rights. Withholding limits are inapplicable where the beneficial owner's shareholding 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 apply. Source States may not tax such dividends or undistributed profits except in specified resident or effectively connected circumstances.