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HMRC internal manual

Double Taxation Relief Manual

HM Revenue & Customs
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DT: Grenada: double taxation agreement, Article 6: Dividends

(1) Dividends paid by a company resident in one of the territories to a resident of theother territory who is subject to tax in that other territory in respect thereof and notengaged in trade or business in the first-mentioned territory through a permanentestablishment situated therein, shall be exempt from any tax in that first-mentionedterritory which is chargeable on dividends in addition to the tax chargeable in respect ofthe profits or income of the company.

(2) Where a company which is a resident of one of the territories derives profits orincome from sources within the other territory, the Government of that other territoryshall not impose any form of taxation on dividends paid by the company to persons notresident in that other territory, or any tax in the nature of an undistributed profits taxon undistributed profits of the company, by reason of the fact that those dividends orundistributed profits represent in whole or in part, profits or income so derived.

(3) If the recipient of a dividend is a company which owns 10 per cent. or more of theclass of shares in respect of which the dividend is paid then sub-paragraph (1) shall notapply to the dividend to the extent that it can have been paid only out of profits whichthe company paying the dividend earned or other income which it received in a periodending twelve months or more before the relevant date. For the purposes of thissub-paragraph the term `relevant date` means the date on which the beneficial owner of thedividend became the owner of 10 per cent. or more of the class of shares in question.Provided that this sub-paragraph shall not apply if the beneficial owner of the dividendshows that the shares were acquired for bona fide commercial reasons and not primarily forthe purpose of securing the benefit of this paragraph.