DT4630.10 - Canada: Article 10: Dividends. Article 10 as inserted by the further agreement SI85 No 1996 (see DT 4602).
(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 the
beneficial owner of the dividends is a resident of the other
Contracting State the tax so charged shall not exceed:
- 5 per cent of the gross amount of the dividends if the
beneficial owner is a company which controls, directly or
indirectly, at least 10 per cent of the voting power in the company
paying the dividends;
- 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 dividends
are paid.
(3) (Deleted by the protocol SI 2993/2619).
(4) 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 assimilated to or
treated in the same way as income from shares by the taxation law
of the State of which the company making the payment is a resident.
(5) The provisions of paragraphs 1 and 2 of this Article
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, or
performs in that other State professional services from a fixed
base situated therein, and the holding in respect of which the
dividends are paid is effectively connected with such permanent
establishment or fixed base. In such a case, the provisions of
Article 7 or Article 14, as the case may be, shall apply.
(6) Where a company is a resident of only one Contracting
State, the other Contracting 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 undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income
arising in such other State.
(7) 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.
