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HMRC internal manual

Double Taxation Relief Manual

From
HM Revenue & Customs
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DT: Yugoslavia: double taxation agreement, Article 10: Dividends

 

(1) Dividends derived from a company which is a resident of a Contracting State by a resident of the other Contracting State may be taxed in the other Contracting State.

(2) Dividends paid by a company which is a resident of a Contracting State may be taxed inthat State, and according to the law of that State, but if the recipient is the beneficial owner of the dividends the amount of tax so charged shall not exceed:

(a) 5 per cent of the gross amount of the dividends if the beneficial owner there of is acompany (excluding a partnership) which controls directly or indirectly at least 25 percent of the voting power in the company paying the dividends;

(b) in all other cases, 15 per cent of the gross amount of the dividends.

(3) However, as long as an individual resident in the United Kingdom is entitled to a tax credit in respect of dividends paid by a company resident in the United Kingdom thefollowing provisions of this paragraph shall apply, subject to paragraph (4) of this Article, instead of the provisions of paragraph (2) of this Article, insofar as the provisions of paragraph (2) relate to dividends paid by a company which is a resident of the United Kingdom, namely: a resident of Yugoslavia who receives a dividend from acompany which is a resident of the United Kingdom shall, provided that he is the beneficial owner of the dividend, be entitled to the same amount of tax credit to which an individual resident in the United Kingdom would have been entitled had he received that dividend, less a deduction (to be treated as tax) not exceeding 15 per cent of the aggregate of the amount or value of the dividend and the amount of the tax credit.

(4) The provisions of paragraph (3) of this Article shall not apply where the beneficial owner of the dividends is a company which either alone or together with one or more associated companies controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividends. For the purposes of this paragraph two companies shall be deemed to be associated if one controls directly or indirectly more than 50 per cent of the voting power in the other company, or a third company controls more than 50 per cent of the voting power in both of them.

(5) The term `dividends` as used in this Article means income from shares, or other rights, not being debt-claims, participating in profits, as well as income from corporaterights assimilated to income from shares by the taxation laws of the State of which the company making the distribution is a resident.

(6) The provisions of this Article shall not apply where the resident of one of the Contracting States has in the other Contracting State a permanent establishment and the holding by virtue of which the dividends are paid is effectively connected with the business carried on through such permanent establishment. In such a case the provisions of Article 7 shall apply.

(7) 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 and beneficially owned by persons who are not residents of the 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 that other State 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.