(1) Dividends paid by a company which 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 be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the law of that State, but the tax so charged shall not exceed:
- (a) 10 per cent of the gross amount of the dividends if the recipient is a company (excluding partnerships) which owns directly at least 25 per cent of the capital of the company paying the dividends;
- (b) 20 per cent of the gross amount of the dividends in all other cases.
(3) Notwithstanding the provisions of paragraph (2) German tax on dividends paid to a company being a resident of Trinidad and Tobago by a company being a resident of the Federal Republic, at least 25 per cent of the capital of which is held directly or indirectly by the former company itself, or by it together with other persons controlling it or being under common control with it, shall not exceed 25.75 per cent of the gross amount of such dividends as long as the rate of German corporation tax on distributed profits is lower than that on undistributed profits and the difference between those two rates is 20 units or more.
(4) The term "dividends" as used in this Article means income from shares as well as income from other corporate rights assimilated to income from shares by the taxation law of the State of which the company making the distribution is a resident, and shall also include distributions on certificates of an investment trust. It shall also include, in the case of the Federal Republic of Germany, income derived by a sleeping partner from his participation as such and, in the case of Trinidad and Tobago, any item of income which under the law of Trinidad and Tobago is treated as a distribution.
(5) The provisions of paragraphs (1) to (3) shall not apply if the recipient of the dividends, being a resident of a Contracting State, has in the other Contracting State, of which the company paying the dividends is a resident, a permanent establishment with which the holding by virtue of which the dividends are paid is effectively connected. In such a 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, that other State may not impose any tax on the dividends paid by the company to persons who are not residents of that other State, or subject the company's undistributed 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.
(7) Where a company which is a resident of one of the Contracting States, having a permanent establishment in the other Contracting State, derives profits or income from that permanent establishment, any remittances of such profits by the permanent establishment to the resident of the first-mentioned State may be taxed in accordance with the law of the other Contracting State but the rate of tax imposed on such remittances shall not exceed 10 per cent, provided that such tax shall not apply to the extent to which the profits remitted have been re- invested in the other Contracting State.