ARTICLE 10

Dividends

(1) Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

(2) However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State the tax so charged shall not exceed:

• (a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company which directly holds at least 10 per cent of the capital of the company paying the dividends;
• (b) 15 per cent of the gross amount of the dividends in all other cases.

The competent authorities of the Contracting States shall resolve, by mutual agreement, the mode of application of these limitations.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

(3) Notwithstanding the provisions of paragraphs (1) and (2), dividends paid by a company which is a resident of a Contracting State shall be taxable only in the other Contracting State if the beneficial owner of the dividends is that other State, its political subdivisions, local authorities or the Central Bank of the State, a pension fund, an investment authority or any other institution established by the Government, a political subdivision, a local authority of that other State and recognized as an integral part of this government by mutual agreement between the competent authorities of the Contracting States.

(4) The term "dividends" as used in this Article refers to income from shares, "jouissance" shares or certificates, mining or founder's shares or other beneficiary rights, not being debt-claims, as well as income from other social parts which is subjected to the same taxation treatment as income from shares under the laws of the State of which the company making the distribution is a resident.

(5) The provisions of paragraphs (1), (2) and (3) of this Article shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, either an industrial or commercial activity through a permanent establishment situated therein, or independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected therewith. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.

(6) Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even in case the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.