Armenia - Dividend

Article 10. Dividends

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 recipient is the beneficial owner of the dividends the tax so charged shall not exceed:

a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends;

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

3. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of paragraph 2.

4. The provisions of paragraph 2 shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

5. The term "dividends" as used in this Convention 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 from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

6. The provisions of paragraphs 1 and 2 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 independent personal 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 case the provisions of Article 7 (Business profits) or Article 14 (Independent personal services), as the case may be, 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, 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 the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits arising in such other State.

Protocol:

Ad Article 10

It is understood, that, notwithstanding Article XI of this Protocol, with respect to dividends as meant in subparagraph a) of paragraph 2 of Article 10 of the Convention which are paid by a company which is a resident of a Contracting State to a company which is a resident of the other Contracting State, if according to the law in force of the other Contracting State taxation of such dividends when paid to an individual would in that other Contracting State result in a tax burden less than the tax burden on dividends in the first-mentioned Contracting State, the first-mentioned Contracting State may levy a tax at a rate which together with the tax rate levied on the redistributed dividends by the other Contracting State does not exceed 15 percent of the gross amount of the dividends. This tax will be levied by way of an assessment issued by the Netherlands to the company that received the above-mentioned dividends.

However, it is further understood that the provisions under paragraph 1 above do not apply if the dividends are paid by a company which is a resident of a Contracting State and the beneficial owner of the dividends is a company which is a resident of the other Contracting State and either:

a) the capital of the company receiving the dividends is exclusively beneficially owned by the Government of the other Contracting State, a political subdivision or local authority thereof; or

b) shares in such company are regularly traded in a Stock Exchange of the other Contracting State; or

c) the company receiving the dividends is engaged in an active trade or business in the other Contracting State.

In case a company does not fulfil one of the conditions laid down in paragraph 2 above, the provisions of paragraph 1 above shall also not apply with respect to such company if it is established in mutual agreement by the competent authorities of the Contracting States, in conformity with Article 27 of the Convention, that such company is not established or maintained in the other Contracting State mainly for the purpose of ensuring the benefits of subparagraph a) of paragraph 2 of Article 10 of the Convention or Article XII of this Protocol and provided that the company receiving the dividends is a resident of the other Contracting State and the beneficial owner of the dividends.

Ad Articles 10, 11 and 12

Where tax has been levied at source in excess of the amount of tax chargeable under the provisions of Articles 10, 11 or 12, applications for the refund of the excess amount of tax have to be lodged with the competent authority of the State having levied the tax, within a period of three years after the expiration of the calendar year in which the tax has been levied.

Ad Articles 10 and 13

It is understood that in the case of the Netherlands income received in connection with the (partial) liquidation of a company or a purchase of own shares by a company is treated as income from shares and not as capital gains.