ARTICLE 10
Dividends
(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) 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 percent of the gross amount of the dividends, where the beneficial owner is a company (but not a partnership) which directly holds at least 25 percent of the capital of the company paying the dividends, and this capital share amounts to at least 150,000 euro or the corresponding value in Azerbaijani manat;
- (b) 15 percent of the gross amount of the dividends in all other cases.
The competent authorities of the Contracting States shall resolve the modalities of the application of this limitation through mutual agreement.
This paragraph shall not affect the taxation of the profits of the company out of which the dividends are paid.
(3) The term "dividends" as used in this Article means income from shares, profit participation shares or profit participation rights, mining shares, founders' shares or other rights, not being debt-claims, participation in profits as well as income from other corporate rights that 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.
(4) The provisions of paragraphs (1) and (2) 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 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 respective provisions of Article 7 or Article 14 shall apply.
(5) Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, then 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 situated in that other State, nor subject the company's undistributed profits to a tax 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.