Dividends tax allocation: source-state withholding limited where recipient is beneficial owner, with exceptions for permanent establishments. Under the DTAA, dividends paid to a resident of the other Contracting State may be taxed in the recipient's state, but may also be taxed in the state where the distributing company is resident; if the recipient is the beneficial owner the source state's tax is subject to a reduced cap. 'Dividends' include income from shares and similar profit-participating corporate rights. The withholding limitation does not apply when the beneficial owner has a permanent establishment or fixed base in the source state and the holding is effectively connected with it; in that event rules on business or independent personal services profits govern. A contracting state may not tax dividends or undistributed profits of a resident company derived from the other state, except as provided above.
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 allocation: source-state withholding limited where recipient is beneficial owner, with exceptions for permanent establishments.
Under the DTAA, dividends paid to a resident of the other Contracting State may be taxed in the recipient's state, but may also be taxed in the state where the distributing company is resident; if the recipient is the beneficial owner the source state's tax is subject to a reduced cap. "Dividends" include income from shares and similar profit-participating corporate rights. The withholding limitation does not apply when the beneficial owner has a permanent establishment or fixed base in the source state and the holding is effectively connected with it; in that event rules on business or independent personal services profits govern. A contracting state may not tax dividends or undistributed profits of a resident company derived from the other state, except as provided above.
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