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 if the beneficial owner is a company (other than a partnership) which directly holds 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 competent authorities of the Contracting States shall resolve the modalities of application of this limitation through mutual agreement.

The provisions of 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 refers to income from shares, participation rights or participation certificates, registered mining shares, founder's shares or other rights, not being debt-claims, participating in profits and any other income which is subject to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident as well as distributions on shares of mutual funds.

(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 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, 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. Further, the other State may not impose any taxation on the undistributed profits of the company, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in that other State.