(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 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 a resident of the other Contracting State
is the beneficial owner of the dividends the
tax so charged shall not exceed:
a) 5 per cent of the gross amount of the
dividends if the beneficial owner is a
company that controls at least 10 per
cent of the voting power in the compa-
ny paying the dividends;
b) 15 per cent of the gross amount of the
dividends in all other cases.
The provisions of this paragraph shall not
affect the taxation of the company in
respect of the profits out of which the divi-
dends are paid.
(3) The term “dividends” as used in this
Article means:
a) dividends on shares including income
from shares, “jouissance” shares or
“jouissance” rights, mining shares,
founders’ shares or other rights, not
being debt-claims, participating in prof-
its, and
b) other income which is subjected to the
same taxation treatment as income
from shares by the laws of the State of
which the company making the distri-
bution is a resident, and for the purpose
of taxation in the Federal Republic of
Germany, income derived by a “stiller
Gesellschafter” (sleeping partner) from
the partner’s participation as such,
income from a “partiarisches Darlehen”
(loan, with interest rate linked to bor-
rower’s profit) or “Gewinnobligationen”
(profit sharing bonds) and similar remu-
neration which is dependent on profits
as well as distributions on certificates of
an investment trust.
(4) The provisions of paragraphs 1 and 2
shall not apply if the beneficial owner of the
dividends, being a resident of a Contract-
ing State, carries on business in the other
Contracting State of which the company
paying the dividends is a resident, through
a permanent establishment situated there-
in, or performs in that other State independ-
ent personal services from a fixed base
situated therein, and the holding in respect
of which the dividends are paid is effective-
ly connected with such permanent estab-
lishment or fixed base. 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 and not also a resi-
dent of the other Contracting State derives
profits or income from the other State, that
other State may not impose any tax on the
dividends paid by the company, except
insofar as such dividends are paid to a resi-
dent of that other State or insofar as the
holding in respect of which the dividends
are paid is effectively connected with a per-
manent establishment or a fixed base situ-
ated 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.
(6) Notwithstanding any provision in this
Agreement, Canada may impose on the
earnings of a company attributable to per-
manent establishments in Canada, or on
the earnings attributable to the alienation of
immovable property situated in Canada by
a company carrying on a trade in immov-
able property, tax in addition to the tax
which would be chargeable on the earnings
of a company that is a resident of Canada,
provided that the rate of such additional tax
so imposed shall not exceed the percent-
age limitation provided for under subpara-
graph (a) of paragraph 2 of the amount of
such earnings which have not been sub-
jected to such additional tax in previous
taxation years. For the purpose of this pro-
vision, the term “earnings” means:
a) the earnings attributable to the aliena-
tion of such immovable property situ-
ated in Canada as may be taxed by
Canada under the provisions of Article
6 or of paragraph 1 of Article 13, and
b) the profits attributable to such per-
manent establishments in Canada (in-
cluding gains from the alienation of
property forming part of the business
property, referred to in paragraph 2 of
Article 13, of such permanent establish-
ments) in accordance with Article 7 in a
year and previous years after deducting
therefrom:
aa) business losses attributable to
such permanent establishments
(including losses from the aliena-
tion of property forming part of the
business property of such perma-
nent establishments) in such year
and previous years,
bb) all taxes chargeable in Canada on
such profits, other than the addi-
tional tax referred to herein,
cc) the profits reinvested in Canada,
provided that the amount of such
deduction shall be determined in
accordance with the provisions of
the law of Canada, as they be
amended from time to time without
changing the general principle
hereof, regarding the computation
of the allowance in respect of
investment in property in Canada,
and
dd) five hundred thousand Canadian
dollars ($500,000) or its equivalent
in the currency of the Federal
Republic of Germany, less any
amount deducted
aaa) by the company, or
bbb) by a person related thereto
from the same or a similar
business as that carried on
by the company
under this clause.