Dividends tax exemption prevents source taxation of dividends to non-residents unless effectively connected with a permanent establishment. Dividends paid by a resident company of one Contracting State to a resident of the other are exempt from taxation in the source state; 'dividends' encompass income from shares and analogous corporate rights or any distribution treated as a dividend under the company's residence-state law. The exemption is inapplicable where the recipient carries on business in the source state through a permanent establishment or fixed base and the holding is effectively connected with that establishment, in which case the provisions governing business profits or independent personal services apply. The source state may not tax dividends to non-residents or tax undistributed profits of a resident company 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 tax exemption prevents source taxation of dividends to non-residents unless effectively connected with a permanent establishment.
Dividends paid by a resident company of one Contracting State to a resident of the other are exempt from taxation in the source state; "dividends" encompass income from shares and analogous corporate rights or any distribution treated as a dividend under the company's residence-state law. The exemption is inapplicable where the recipient carries on business in the source state through a permanent establishment or fixed base and the holding is effectively connected with that establishment, in which case the provisions governing business profits or independent personal services apply. The source state may not tax dividends to non-residents or tax undistributed profits of a resident company arising in the other state.
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