Macedonia - 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 beneficial owner of the dividends is a resident of the other Contracting State, 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, if the beneficial owner of the dividends is 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 10 per cent of the capital of the company paying the dividends.

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

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

6. The term “dividends" as used in this Article means income from shares, “jouissance" shares or “jouissance" rights, mining shares, founders' 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.

7. The provisions of paragraphs 1, 2 and 3 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.

8. 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 or income arising in such other State.

Protocol:

V. Ad Article 10

1. It is understood, that, with respect to dividends as meant in paragraph 3 of Article 10 which are paid by a company which is a Netherlands resident, if according to the law in force in the Macedonian Contracting State taxation of such dividends in the Macedonian Contracting State will result in a tax burden of less than 15% of the gross amount of the dividends, the Netherlands Contracting State may levy a tax not exceeding 15% of the gross amount of the dividends.

2. 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 Netherlands resident and the beneficial owner of the dividends is a company which is a Macedonian resident and either:

a)the capital of the company receiving the dividends is exclusively beneficially owned by the Macedonian Government or local authority thereof; or

b)shares in such company are regularly traded on the Macedonian Stock Exchange; or

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

3. In case a company does not fulfill 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 Macedonian Contracting State mainly for the purpose of ensuring the benefits of paragraph 3 of Article 10 of the Convention and provided that the company receiving the dividends is a Macedonian resident and the beneficial owner of the dividends.

VI. 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.

VII. Ad Articles 10 and 13

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