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CHAPTER I - Scope of the Arrangement
CHAPTER II - Definitions
CHAPTER III - Taxation of Income
CHAPTER IV - Avoidance of Double Taxation
CHAPTER V - Special Provisions
CHAPTER VI - Final Provisions
Note: This Treaty may be impacted by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). MLI impact on Tax Treaties is available with the Orbitax International Tax Research & Compliance Expert.

ARTICLE 10

Dividends

(1) Dividends paid by a company which is a resident of a country to a resident of the other country may be taxed in that other country.

(2) However, such dividends may also be taxed in the country of which the company paying the dividends is a resident and according to the laws of that country, but if the beneficial owner of the dividends is a resident of the other country, the tax so charged shall not exceed 15% of the gross amount of the dividends.

(3) Notwithstanding the provisions of paragraph (2), dividends referred to in paragraph (1) shall be taxable only in the other country if the beneficial owner of the dividends is:

  • (a) a company the capital of which is wholly or partly divided into shares, and which is a resident of the other country and holds directly at least 10% of the capital of the company paying the dividends, provided that it is a qualified company within the meaning of paragraph (4);
  • (b) a country or a political subdivision or a local authority thereof; or
  • (c) a pension fund.

(4) For the purposes of paragraph (3), the following shall be regarded as qualified companies:

  • (a) a company, if:
    • (1) its shares are regularly traded on a recognised stock exchange;
    • (2) at least 50% of its shares is owned by one or several companies the shares of which are regularly traded on a recognised stock exchange, but only if the last-mentioned companies:
      • (aa) are residents of one of the countries; or
      • (bb) would be entitled to similar or more favourable benefits under paragraph (3) pursuant to a comprehensive arrangement for the avoidance of double taxation between its country of residence and the country from which the benefits under paragraph (3) are claimed or pursuant to a multilateral agreement to which its country of residence and the country from which the benefits under paragraph (3) are claimed are a party;
  • (b) a company which is a headquarters company for a multinational corporate group which provides a substantial portion of the overall supervision and management of the group or the administration thereof, or provides a substantial portion of the group's financing, and which has, and exercises, independent discretionary authority to carry out these functions, provided that a company shall be considered a headquarters company for this purpose only if:
    • (1) the corporate group consists of enterprises resident in, and engaged in an active business in, at least five countries or five groupings of countries and the business activities carried on in each of the five countries (or five groupings of countries) generate at least 10% of the gross income of the group;
    • (2) no more than 50% of its gross income is derived from the country of which the company paying the dividends is a resident; and
    • (3) the company is subject to the same income taxation rules in the country of which it is a resident as other companies which are residents of that country and engaged in an active business therein (not including activities consisting of financial services, royalty payments, insurance or reinsurance activities);
  • (c) a company which, in the country of which it is a resident, provides full-time permanent work, as a rule, to at least three individuals who are independently engaged in the activities, assets and income of the company and whose powers and responsibilities are consistent with the nature and function of these activities, the extent of those assets and that income, and provided that they are residents of the country of which that company is a resident.

(5) A company which is a resident of a country and fails to qualify for the benefits under paragraph (3) because it is not a qualified company within the meaning of paragraph (4) may, however, qualify for such benefits if the conditions for the application of paragraph (3) are otherwise satisfied, provided that:

  • (a) the company is engaged in an active business in the first-mentioned country (other than the business of making or managing investments for the company's own account, unless the business is banking, insurance or securities business carried on by a bank, insurance company or securities company), and the dividends are derived from that other country in connection with, or as a result of, such business; or
  • (b) the competent authority of the other country determines that the establishment, acquisition or maintenance of the company or the interest (belang) held by that company in the company paying the dividends does not have as its main purpose or one of its main purposes to secure the benefits under paragraph (3).

(6) The competent authority of the country to which a request under sub-paragraph (b) of paragraph (5) is made:

  • (a) shall, in determining the main purpose or one of the main purposes referred to in that sub-paragraph, carefully consider the facts and circumstances, including the nature and volume of the activities of the company in its country of residence in relation to the nature and volume of the dividends paid, both the historical and the current ownership of the company, and the business reasons of the company to be a resident of its country of residence;
  • (b) consult with the competent authority of the other country before denying the benefit under paragraph (3).

(7) For the purposes of sub-paragraph (a) of paragraph (4), the term "recognised stock exchange" means:

  • (a) any of the stock exchanges in the Member States of the European Union;
  • (b) the Dutch Caribbean Securities Exchange;
  • (c) the NASDAQ System and any stock exchange in the United States of America which is registered with the U.S. Securities and Exchange Commission as a national securities exchange under the U.S. Securities Exchange Act of 1934;
  • (d) the Bolsa Mexicana de Valores (the Mexican Stock Exchange) and the Toronto Stock Exchange;
  • (e) the Chilean "Bolsa de Comercio", "Bolsa Electrónica de Chile" and "Bolsa de Corredores"; and
  • (f) any other stock exchange agreed upon by the competent authorities of the countries;

provided that the purchase or sale of shares on the respective stock exchange is not implicitly or explicitly restricted to a limited group of investors.

(8) Notwithstanding the provisions of paragraph (2), dividends referred to in paragraph (1) shall be taxable only in the other country if the beneficial owner of the dividends is a company which is a resident of the other country and whose capital is wholly or partly divided into shares and of which at least 50% is held directly or indirectly by one or more individuals who are residents of either country and provided that such company holds directly at least 10% of the capital of the company paying the dividends.

(9) The provisions of paragraphs (2), (3), (5) and (8) shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

(10) The provisions of this Article shall not prevent the Netherlands from levying the revenue tax (opbrengstbelasting) on dividends paid by a company which is liable to the withholding obligation in respect of this revenue tax.

(11) The term "dividends" as used in this Article means income from shares, "jouissance" shares or "jouissance" rights, mining shares, founders' shares or other rights, not being debt-claims, participating in profits, as well as other income which is subjected to the same taxation treatment as income from shares by the laws of the country of which the company making the distribution is a resident. The term "dividends" also includes any payments made upon the redemption of shares by, or upon the liquidation of, a company in an amount higher than the average of the respective paid-up capital.

(12) The provisions of paragraphs (1), (2), (3), (5), (8) and (14) shall not apply if the beneficial owner of the dividends, being a resident of a country, carries on business in the other country of which the company paying the dividends is a resident through a permanent establishment situated therein and the shareholding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

(13) Where a company which is a resident of a country derives profits or income from the other country, that other country 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 country or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other country, 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 country.

(14) Notwithstanding the provisions of paragraphs (1), (2) and (13), dividends paid by a company which under the laws of a country is a resident of that country, to an individual who is a resident of the other country and who upon ceasing to be a resident of the first-mentioned country is taxed on the appreciation of capital as referred to in paragraph (5) of Article 13, may also be taxed in that country in accordance with the laws of that country, but only for a period of ten years after emigration of the individual and insofar as the assessment on the appreciation of capital is still outstanding.

(15) The competent authority of the country of which the company paying the dividends is a resident shall determine how the reduction of the tax levied in accordance with the laws of that country is granted insofar as the amount of tax exceeds that which may be levied in accordance with the provisions of this Article or Article 30. Requests for the refund of tax shall be submitted within a period of five years after the end of the calendar year in which the tax was levied.