Dividend withholding limitation restricts source-state tax on cross-border dividends where recipient is beneficial owner, subject to effective connection rules. A resident recipient of dividends may be taxed in its State while the distributing company's State may also tax those dividends, but withholding tax is limited to ten percent of the gross amount where the recipient is the beneficial owner; dividends are defined to include income from shares and analogous corporate rights, and dividend rules do not apply where the beneficial owner's holding is effectively connected with a permanent establishment or fixed base in the distributing State, in which case business profits or independent personal services provisions govern.
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.
Dividend withholding limitation restricts source-state tax on cross-border dividends where recipient is beneficial owner, subject to effective connection rules.
A resident recipient of dividends may be taxed in its State while the distributing company's State may also tax those dividends, but withholding tax is limited to ten percent of the gross amount where the recipient is the beneficial owner; dividends are defined to include income from shares and analogous corporate rights, and dividend rules do not apply where the beneficial owner's holding is effectively connected with a permanent establishment or fixed base in the distributing State, in which case business profits or independent personal services provisions govern.
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