Russian Federation - 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 of the dividends is a company (other than a partnership) which holds directly at least 25% of the capital of the company paying the dividends and has invested in it at least 75,000 ECU or its equivalent in the national currencies of the Contracting States;

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

3.  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.

4.  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 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.

5.  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 or article 14, as the case may be, shall apply.

6.  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 articles 10 and 11

It is understood that in the case of the Netherlands the term dividends includes income from profit sharing bonds.

VI. Ad article 10

It is understood that for establishing whether the condition of a minimum investment of 75.000 Ecu is met, the value of the investment at the moment of making this investment will be taken into account, as well as any investments made or withdrawn thereafter.

VII. Ad article 10

The term “dividends" as used in paragraph 4 of Article 10 shall include remittances out of Russia of profits derived by a resident of the Netherlands from his investment as a participant in a joint venture with Russian and foreign investment that is treated as a body corporate or legal entity for tax purposes.

VIII. Ad articles 10, 11 and 12

Each Contracting State shall endeavour to establish procedures to enable taxpayers to receive income dealt with under articles 11 and 12 without the imposition of withholding taxes where the Agreement provides for taxation in the State of residence only. Where the Agreement provides for taxation in the State where the income arises each State shall endeavour to establish procedures to enable taxpayers to receive income under deduction of tax at the rate provided for in the Agreement.

Where tax has been levied at source at a rate in excess of that provided for under the terms of the Agreement, 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 two years after the expiration of the calendar year in which the tax has been levied. Where a claim is made by a taxpayer for a refund as meant in the foregoing sentence tax withheld at source in a Contracting State at the rate in excess of that provided for under the terms of the Agreement will be refunded in a timely manner.