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1. Dividends paid by a company which is a resident of a Con- tracting State to a resident of the other Contracting State may be taxed in that other State.
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2. However, such dividends may also be taxed in the Con- tracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the ben- eficial owner of the dividends is a resident of the other Contracting State the tax so charged shall not exceed: a) 5 per cent of the gross amount of the dividends if the benefi- cial owner is a company (other than a partnership) which holds directly at least 10 per cent of the capital of the com- pany paying the dividends; b) 15 per cent of the gross amount of the dividends in all other cases.
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3. In the case of Malta, the provisions of paragraph 2 shall not apply as long as according to the Malta tax law the tax charge- able on the profits of a company may be offset against the share- holder’s income tax. In such case the Malta tax on the gross amount of the dividends paid by a company which is a resident of Malta to a resident of the Federal Republic of Germany who is the beneficial owner thereof shall not exceed: a) that tax which is chargeable on the profits out of which the dividends are paid; or b) 15 per cent on the profits out of which the dividends are paid, if the dividends are paid out of gains or profits earned in any year in respect of which the company is in receipt of any benefit under the provisions regulating aids to industries in Malta, and the shareholder submits returns and accounts to the taxation authorities of Malta in respect of his income liable to Malta tax for the relative year of assessment.
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4. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or 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 distribution is a resident. The term “dividends” includes also income derived by a sleeping partner (“stiller Gesellschafter”) from his participation as such or from a “partiarisches Darlehen”, “Gewinnobligationen” or similar payments and distributions on certificates of an invest- ment fund or investment trust.
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5. The provisions of paragraphs 1 to 3 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 therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the divi- dends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.
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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, 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 or a fixed base situated in that other State, nor subject the company’s undistributed profits to a tax on the com- pany’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.