Finland - 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 15 per cent of the gross amount of the dividends.

3.   Notwithstanding the provisions of paragraph 2, the Contracting State of which the company is a resident shall not levy a tax on dividends paid by that company to a company the capital of which is wholly or partly divided into shares and which is a resident of the other Contracting State and holds directly at least 5 per cent of the capital of the company paying the dividends, or to a pension fund referred to in paragraph 4 of Article 4, if the recipient is the beneficial owner of the dividends and of the shares or other corporate rights giving right to the dividends.

4.   Notwithstanding the provisions of paragraph 1, 2 and 3, as long as an individual resident in Finland is entitled to a tax credit in respect of dividends paid by a company resident in Finland, dividends paid by a company which is a resident of Finland to a resident of the Netherlands shall be taxable only in the Netherlands if the recipient is the beneficial owner of the dividends and of the shares or other corporate rights giving right to the dividends.

5.   The competent authorities of the Contracting State shall by mutual agreement settle the mode of application of paragraphs 2, 3 and 4.

6.   The provisions of paragraphs 2, 3 and 4 shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

7.   The term “dividends” as used in this Article means income from shares, or other rights participating in profits, as well as income from debt-claims participating in profits and 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.

8.   The provisions of paragraphs 1, 2, 3 and 4 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 or Article 14, as the case may be, shall apply.

9.   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 to 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 or income arising in such other State.

Protocol:

VI. Ad Article 10

Finnish tax law provides for the elimination of economic double taxation of profits derived by resident companies by entitling resident shareholders to a tax credit in respect of dividends paid by such companies equal to one-third of the dividends paid to the shareholders. Where, such dividends have not borne corporate income tax at an amount not less than one-third of the profits distributed, inter alia, as a result of foreign dividends derived by the distributing company and being exempt from that tax, the company is liable to a compensatory tax (täydennysvero; kompletteringsskatt) corresponding to the amount by which the above-mentioned amount exceeds the actually payable amount of corporate income tax. Notwithstanding this general rule, compensatory tax is not payable to the extent that the company for the tax year concerned re-distributes foreign dividends and the recipient of the dividends is a company resident in the Netherlands not directly or indirectly controlled by persons resident in Finland that has at the end of the same tax year directly owned not less than 25 per cent of the capital of the company paying the dividends.

VII. Ad Articles 10, 11 and 12

Where tax has been withheld at source in excess of the maximum amount of tax referred to in 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 Contracting State in which the tax has been withheld, within a period of five years after the expiration of the calendar year in which the tax has been withheld.