United Kingdom - 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:

a.  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:

i.  10 per cent of the gross amount of the dividends, except as provided in sub-paragraph a) (ii);

ii.  15 per cent of the gross amount of the dividends where those dividends are paid out of income or gains derived directly or indirectly from immovable property within the meaning of Article 6 by an investment vehicle which distributes most of this income annually and whose income from such immovable property is exempted from tax;

b.  shall, notwithstanding the provisions of sub-paragraph a), be exempt from tax in the Contracting State of which the company paying the dividends is a resident if the beneficial owner of the dividends is:

i.  a company which is a resident of the other Contracting State and controls, directly or indirectly, at least 10 per cent of the voting power in the company paying the dividends (other than where the dividends are paid by an investment vehicle as mentioned in subparagraph a) (ii)); or

ii.  a pension scheme; or

iii.  an organisation falling within sub-paragraph b) of paragraph 2 of Article 4.

3.  No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with an assignment of the dividends, or with the creation or assignment of the shares or other rights in respect of which the dividend is paid, or with the establishment, acquisition or maintenance of the company that is the beneficial owner of the dividends and the conduct of its operations, to take advantage of this Article. In any case where a Contracting State intends to apply this paragraph, its competent authority shall in advance consult with the competent authority of the other Contracting State.

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 any other item which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident.

5.  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 and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 of this Convention 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 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 that other State.

Protocol:

III. With reference to paragraph 1, subparagraph l) of Article 3 (General definitions), paragraph 2, subparagraph a) of Article 4 (Residence), paragraph 2, subparagraph b) (ii) of Article 10 (Dividends) and paragraph 4, subparagraph c) of Article 13 (Capital gains):

It is understood that the term “pension scheme” includes:

a. in the case of the Netherlands, a pension fund that is established and regulated as such under the laws of the Netherlands and the income of which is generally exempt from tax in the Netherlands;

b. in the case of the United Kingdom, pension schemes (other than a social security scheme) registered under Part 4 of the Finance Act 2004, including pension funds or pension schemes arranged through insurance companies and unit trusts where the unit holders are exclusively pension schemes.

The competent authorities may agree to include in the above, pension schemes of identical or substantially similar economic or legal nature which are introduced by way of statute or legislation in either State after the date of signature of the Convention.

V. With reference to Articles 10 (Dividends) and 11 (Interest):

It is understood that an authorised representative of an investment fund established in a Contracting State may submit a claim relating to the benefits afforded by the provisions of these Articles. The competent authorities may consult together with a view to putting arrangements in place which facilitate claims and resolving any doubts concerning eligibility.

VI. With reference to Articles 10 (Dividends) and 13 (Capital Gains):

It is understood that income received in connection with the liquidation (in whole or in part) of a company or a purchase of own shares by a company is treated, for Netherlands tax purposes, as income from shares and not as capital gains.