Saudi Arabia - 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 Contracting 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:

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

b. 10 percent of the gross amount of the dividends in all other cases. 

The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this paragraph. The provisions of this paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

3.  The term “dividends” as used in this Article 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 subject 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. 

4.  The provisions of paragraphs 1 and 2 of this Article 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 a case the provisions of Article 7 or Article 14, as the case may be, shall apply. 

5.  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 paragraph 2 (a) Article 10

In case of a significant change of the system on withholding tax on dividends in one of the two Contracting States after the moment of signing this Convention, the Contracting States shall enter into negotiations to insert an anti-abuse provision in the Conve.

VIII. Ad Articles 10, 13 en 23

Notwithstanding Articles 10 and 13 dividends and capital gains accumulated in the period an individual was a resident of the Netherlands before he has become a resident of the Kingdom of Saudi Arabia, may be taxed in the Netherlands according to the laws of the Netherlands 10 years after the emigration of the individual. The Kingdom of Saudi Arabia will apply Article 23 only for that part of such income of the individual that has been accumulated before the individual left the Netherlands if the assessment has been issued on his emigration and insofar the tax has been collected.

IX. General

1.  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 five years after the expiration of the calendar year in which the tax has been levied. 

2.  As soon as the laws or regulations of the Kingdom of Saudi Arabia give to residents of other countries, except countries that are member of the Gulf Cooperation Counsel and the Arabic League, national treatment with regard to taxation such national treatment will automatically be provided to residents or former residents of the Netherlands. 

3.  The Kingdom of Saudi Arabia shall with respect to its national laws and regulations treat nationals or residents of the Netherlands for taxation purposes not less favourable than residents or nationals from third countries except countries that are member of the Gulf Cooperation Counsel and the Arabic League. 

4.  In case the Kingdom of Saudi Arabia introduces any form of dispute resolution mechanism, including binding dispute resolution, with any country in a tax convention the Contracting States shall enter into negotiations to insert an Article concerning dispute resolution. 

5.  In case the Kingdom of Saudi Arabia introduces an Article concerning the assistance in recovery with any country in a tax convention the Contracting States shall enter into negotiations to insert an Article for the assistance and support in the collection of the taxes to which this Convention applies. 

6.  Profits which are exempt for a limited period of time not exceeding ten years from tax on income in Saudi Arabia under the provisions of encouragement of its investment laws shall be deemed to be subject to a tax on income for the purpose of the application of the participation exemption by the Netherlands.