ARTICLE 10

Dividends

(1) Dividends paid by a company, which is a resident of one Contracting State to a resident of the other Contracting State, are taxable in that other State as per its legislation.

(2) However, such dividends may 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 the tax so charged shall not exceed:

• (a) fifteen percent of the gross value of these dividends if the beneficial owner is a company which directly spends at least twenty-five percent of the capital together with voting rights of the enterprise which pays the dividends;
• (b) twenty percent of the gross value of the dividends, in all other cases.

(3) Notwithstanding paragraph (2), as long as the rate of the corporation tax for distributed profits remains less than twenty points less than the rate established for retained earnings, the tax imposed on the dividends in the Federal Republic of Germany shall equal twenty-five percent of the gross value of the dividends, if:

• (a) the dividends derived from a joint stock enterprise (Kapitalgesellschaft) that is a resident of the Federal Republic of Germany and collected by an enterprise which is a resident of Iran, and if;
• (b) the enterprise resident of Iran holds directly or indirectly at least twenty-five percent of the capital together with voting rights of the joint stock enterprise (Kapitalgesellschaft) which is a resident of the Federal Republic of Germany.

(4) The term "dividends" as used in this Convention means income from shares, "jouissance" shares or "jouissance" rights, mining shares, promoters' shares or other rights not being debt-claims, as well as the income from other corporate rights which are subjected to the same tax treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

(5) The provisions of paragraphs (1) to (3) do not apply when the recipient of the dividends, resident of a Contracting State, has in the other Contracting State of which the enterprise which pays the dividends is a resident, a permanent establishment to which is effectively connected the holding in respect of which the dividends are paid. In such case, the provisions of Article 7 shall apply.

(6) Where a company, which is a resident of a Contracting State derives profits or income from the other Contracting State, the other State may not impose any tax on the dividends paid by the company to persons who are not residents of that other State, nor withhold any tax, as taxation of undistributed earnings, on the undistributed earnings of the company, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.