Page:UN Treaty Series - vol 1332.pdf/144

Article XVII. 1. Dividends paid to a resident of one of the Contracting States by a company resident of the other Contracting State may not be taxed in that other Contracting State at a rate exceeding 25 per cent.

2. The term "dividends" as used in this article means income from shares, jouissance shares or jouissance rights, founders' shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights assimilated to income from shares by the taxation law of the State of which the company making the distribution is a resident.

3. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the dividends, being a resident of a Contracting State, has in the other Contracting State of which the company paying the dividends is a resident, a permanent establishment with which the holding by virtue of which the dividends are paid is effectively connected. In such a case article VI shall be applicable.

4. Where a company which is a resident of a Contracting State receives profits or income from the other Contracting State, such other State may not levy any tax on the dividends paid by the company to persons who are not residents of that other State, or 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.

Article XVIII. 1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in that other State.

2. The term "royalties" as used in this article means payments of any kind received as consideration for the use of, or the right to use, any copyright of literary, artistic or cientific work including cinematograph films, any patent, trade mark, design or model plan, secret formula or process, or for the use of, or the right to use industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

3. Profits from the alienation of any rights or property mentioned in paragraph 2 shall be taxable only in the Contracting State of which the alienator is a resident.

4. There shall not be treated as royalties any variable or fixed payments for the working of mineral deposits, sources and other natural resources. In such cases articles IV and V, relating to the taxation of income from immovable property, shall apply.

5. The provisions of paragraphs 1 and 3 shall not apply if the recipient of the royalties, or the profits, being a resident of a Contracting State, has in the other Contracting State, in which the royalties arise, a permanent establishment with which the right or property giving rise to the royalties is effectively connected. In such a case article VI shall be applicable.

6. Where, owing to a special relationship between the payer and the recipient or between both of them and some other person, the amount of the royalties paid, having regard to the use, rights or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the Contracting [State's] own laws, due regard being had to the other provisions of this Convention.

Vol. 1332, I-22351