Venezuela - 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 10 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 25 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 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:

VII. Ad Article 10

It is understood, that if, with respect to dividends as meant in paragraph 3 of Article 10 which are paid by a company which is a resident of the Netherlands, according to the law in force in Venezuela taxation of such dividends in Venezuela will result in a tax burden of less than 10% of the gross amount of the dividends, the Netherlands may, from the date that that law has entered into force, levy a tax not exceeding 10% of the gross amount of the dividends. In case such dividends according to the law in force in Venezuela are considered to be foreign-source income and for that reason exempt from tax in Venezuela, the provisions of Article I of this Protocol shall apply.

VIII. Ad Articles 10, 11 and 12

When 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 Contracting 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.

Second Protocol:

Article 4

It is understood that the provisions of Articles I and VII of the Protocol to the Convention do not apply when the beneficial owner of such income is an individual or the Government of the Republic of Venezuela, one of the States of the Republic of Venezuela, a municipality of Venezuela or a company, public or private, which is a resident of Venezuela

–  where the Republic of Venezuela, one of the States of Venezuela or a municipality of Venezuela owns at least fifty percent (50%) of the capital stock of such company, or

–  where such company is engaged in an active trade or business in Venezuela, or

–  where in the principal class of shares in such company there is substantial and regular trading on the Maracaibo and Caracas Stock Exchanges,

provided that such company receiving the income in Venezuela is the beneficial owner of such income.

Further the provisions of Articles I and Vll of the Protocol to the Convention shall not apply in cases where the competent authorities of the Contracting States in conformity with Article 26 of the Convention mutually agree that it is established that any other company receiving such income in Venezuela is a resident of Venezuela according to the provisions of Articles 1 and 4 of the Convention and that such company is not established or maintained in Venezuela mainly for the purpose of ensuring the benefits of paragraph 3 of Article 10 of the Convention.