Convention and the competent authorities of the Contracting States shall if necessary

consult each other.

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:

a) 5 per cent of the gross amount of the dividends if the beneficial owner is a

company (other than a partnership) which holds directly at least 25 per

cent of the capital of the company paying the dividends;

b) 10 per cent 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 these limitations. 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, “jouis-sance” 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 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. The term also in-

cludes profits attributed under an arrangement for participation in profits (“associação em participação”).

4. 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.

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

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