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Note: This Treaty may be impacted by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). MLI impact on Tax Treaties is available with the Orbitax International Tax Research & Compliance Expert.

ARTICLE 10

Dividends

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

(2) However, dividends paid by a company which is a resident of a Contracting State may also be taxed in that State 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 (excluded the groups of persons) that possess directly at least 20 per cent of the capital of the company that pays the dividends; if the described conditions in these provisions are met during a period of 365 days that comprehend the day of the payment of the dividends (in order to calculate this period, will not be considered changes in the property that could derive directly from an entrepreneurial reorganization, as for example for a fusion or split, of the owner company of the shares or that pays the dividends.
  • (b) 15 per cent of the gross amount of the dividends in the other cases.

The provisions of the present paragraph do not affect the taxation of the company related of the other benefits from which the dividends are paid.

(3) Notwithstanding the provisions of paragraph (1) and (2) of this Article, 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 is that State itself, a political subdivision, local government, the Central Bank, a pension fund, or a qualified government entity which is wholly owned directly or indirectly, by the federal or local government, a political subdivision, and local authority thereof.

(4) The term "dividends", used in this Article, means income from shares, enjoyment rights or enjoyment shares, mining shares, founder shares or other rights, not being debt-claims, that allow to participate in the profits, as well as the income of other rights which is subjected to the same taxation treatment as the income of the shares by the law of the State of residence of the company making the distribution.

(5) The provisions of paragraphs (1) and (2) 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 through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 or Article 14 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 who is the beneficial owner of the dividends or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company's undistributed profits to a lax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.