§ PDF page 7
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.
§ PDF page 7
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 Contract- ing 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 25 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. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
§ PDF page 7 PDF page 8
3. 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 sub- jected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribu- tion is a resident. The term “dividends” includes likewise in the Federal Republic of Germany income of a sleeping partner (“stiller Gesellschafter”) from his participation as such, income from a “partiarisches Darlehen”, “Gewinnobligationen” and simi- lar profit-depending remuneration as well as distributions on cer- tificates of an investment fund.
§ PDF page 8
4. Notwithstanding the provisions of paragraphs 2 and 3, in- come derived from rights or debt-claims participating in profits (including in the Federal Republic of Germany income derived by a sleeping partner (“stiller Gesellschafter”) from his participation as such, from a “partiarisches Darlehen” and from “Gewinnobli- gationen”) that is deductible in determining the profits of the debtor may be taxed in the Contracting State in which it arises, and according to the laws of that State. However, the tax so charged shall not exceed 25 per cent of the gross amount of this income.
§ PDF page 8
5. 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 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 Arti- cle 7 or Article 14, as the case may be, shall apply.
§ PDF page 8
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.