(1) Dividends paid by a company that is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.
(2) Such dividends, however, may also be taxed in the Contracting State of which the company paying the dividends is a resident, in accordance with the laws of the State; if, however, the beneficial owner of the dividends is a resident of the other Contracting State, the tax must not exceed:
- (a) 5 percent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) that holds directly at least 10 percent of the capital of the company paying the dividends;
- (b) 15 percent of the gross amount of the dividends in all other cases.
The provisions of this paragraph shall not affect the taxation of the company with respect to profits from which dividends are paid.
(3) The term "dividends" as used in this Article means income from shares, from rights or certificates to participate in profits, from mining shares or from founders' shares or other income that, under the laws of the State of which the company distributing the profits is a resident, is equivalent in tax terms to income from shares. The term "dividends" also means income of a silent partner from his participation as a silent partner, income from a shareholder loan, participating debentures and similar payments if they are not deductible upon ascertainment of the profit of the debtor in accordance with the law of the State from which they derive, as well as distributions for certificates in an investment trust.
(4) 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, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply.
(5) 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 profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.