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- 1.
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- (a) Dividends arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
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- (b) Subject to the provisions of sub-paragraph (c) of this paragraph, any such dividends as are mentioned in sub-paragraph (a) of this paragraph may also be taxed in the first-mentioned State, and according to the laws of that State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed 15 per cent of the gross amount of the dividends.
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- (c) Such dividends as are mentioned in sub-paragraph (a) of this paragraph and are paid by a company which is a resident of the first-mentioned State shall not be taxable in that State if the beneficial owner is a company liable to Corporation Tax which holds, directly or indirectly, at least 10 per cent of the capital in the company paying the dividends and which is a resident of the other Contracting State.
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- (d) Notwithstanding the provisions of Article 1, the tax charged in France on dividends derived therefrom and beneficially owned by a pension fund (other than a company) created, established, and approved for tax purposes in the United Kingdom may not be imposed at a rate exceeding that specified in sub-paragraph (b) of this paragraph.
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- (e) The provisions of this paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
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- 2. 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 income treated as a distribution by the taxation law of the Contracting State of which the company making the distribution is a resident. The term ‘dividends’ does not include income referred to in Article 16.
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- 3. The provisions of paragraph 1 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting 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, and the holding 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.
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- 4. 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 situated 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 that other State.
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- 5. The provisions of subparagraphs (b), (c) and (d) of paragraph 1 shall not apply to dividends paid out of income or gains derived from immovable property within the meaning of Article 6 by an investment vehicle:
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- (a) which distributes most of this income annually; and
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- (b) whose income or gains from such immovable property are exempted from tax;
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- where the beneficial owner of those dividends holds, directly or indirectly, 10 per cent or more of the capital of the vehicle paying the dividends. In such case, the dividends may be taxed at the rate provided for by the domestic law of the Contracting State in which the dividends arise.
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- 6. The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares or other rights in respect of which the dividend is paid to take advantage of this Article by means of that creation or assignment.