Australian Tax Treaties
Icelandic Convention
CONVENTION BETWEEN AUSTRALIA AND ICELAND FOR THE ELIMINATION OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND THE PREVENTION OF TAX EVASION AND AVOIDANCE
CHAPTER III
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TAXATION OF INCOME
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, dividends paid by a company which is a resident of a Contracting State may also be taxed in that State 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 which holds directly at least 10 per cent of the voting power in the company paying the dividends throughout a 365 day period that includes the day of payment of the dividend (for the purpose of computing that period, no account shall be taken of changes of ownership that would directly result from a corporate reorganisation, such as a merger or divisive reorganisation, of the company that holds the shares or that pays the dividend); (b) 15 per cent of the gross amount of the dividends in all other cases.
3.
Notwithstanding the provisions of paragraph 2 , dividends shall not be taxed in the Contracting State of which the company paying the dividends is a resident if the beneficial owner of the dividends is a company that is a resident of the other Contracting State that has held directly or indirectly through one or more residents of either Contracting State, at least 80 per cent of the voting power in the company paying the dividends throughout a 365 day period that includes the day of the payment of the dividend (for the purpose of computing that period, no account shall be taken of changes of ownership that would directly result from a corporate reorganisation, such as a merger or divisive reorganisation, of the company that directly or indirectly holds the shares or that pays the dividend) and the beneficial owner of the dividends: (a) has its principal class of shares listed on a recognised stock exchange specified in subparagraph (m) of Article 3 and regularly traded on one or more recognised stock exchanges; (b) is owned directly or indirectly by one or more companies (provided that, in the case of indirect ownership, each intermediate company is a resident of a Contracting State or a company referred to in subsubparagraph (ii) ):
4.
Notwithstanding the provisions of subparagraph (b) of paragraph 2 , dividends shall not be taxed in the Contracting State of which the company paying the dividends is a resident if the beneficial owner of the dividends directly holds less than 10 per cent of the voting power in the company paying the dividends, the beneficial owner is not able to directly or indirectly determine the identity of one or more persons who make the decisions that comprise the control and direction of the operations of the company paying the dividends, and the beneficial owner is: (a) a Contracting State, or political subdivision or a local authority thereof (including a government investment fund); (b) the Reserve Bank of Australia or the Central Bank of Iceland; (c) in the case of Australia, a recognised pension fund of Australia or a resident of Australia deriving such dividends from the carrying on of complying superannuation activities; or (d) in the case of Iceland, a recognised pension fund of Iceland whose income is exempt from Icelandic tax.
5.
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 other amounts which are 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 for the purposes of its tax.
6.
The provisions of paragraphs 1 , 2 , 3 and 4 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 shall apply.
7.
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 - being dividends beneficially owned by a person who is not a resident of the other Contracting State - except 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 such other State.
8.
Notwithstanding paragraph 7 , dividends paid by a company that is deemed to be a resident only of one Contracting State pursuant to paragraph 3 of Article 4 may be taxed in the other Contracting State, but only to the extent that the dividends are paid out of profits arising in that other Contracting State. Where such dividends are beneficially owned by a resident of the first-mentioned State, paragraph 2 of this Article shall apply as if the company paying the dividends were a resident only of the other State.
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, dividends paid by a company which is a resident of a Contracting State may also be taxed in that State 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 which holds directly at least 10 per cent of the voting power in the company paying the dividends throughout a 365 day period that includes the day of payment of the dividend (for the purpose of computing that period, no account shall be taken of changes of ownership that would directly result from a corporate reorganisation, such as a merger or divisive reorganisation, of the company that holds the shares or that pays the dividend); (b) 15 per cent of the gross amount of the dividends in all other cases.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
3.
Notwithstanding the provisions of paragraph 2 , dividends shall not be taxed in the Contracting State of which the company paying the dividends is a resident if the beneficial owner of the dividends is a company that is a resident of the other Contracting State that has held directly or indirectly through one or more residents of either Contracting State, at least 80 per cent of the voting power in the company paying the dividends throughout a 365 day period that includes the day of the payment of the dividend (for the purpose of computing that period, no account shall be taken of changes of ownership that would directly result from a corporate reorganisation, such as a merger or divisive reorganisation, of the company that directly or indirectly holds the shares or that pays the dividend) and the beneficial owner of the dividends: (a) has its principal class of shares listed on a recognised stock exchange specified in subparagraph (m) of Article 3 and regularly traded on one or more recognised stock exchanges; (b) is owned directly or indirectly by one or more companies (provided that, in the case of indirect ownership, each intermediate company is a resident of a Contracting State or a company referred to in subsubparagraph (ii) ):
(i) whose principal class of shares is listed on a recognised stock exchange specified in subparagraph (m) of Article 3 and regularly traded on one or more such recognised stock exchanges; or
(c) does not meet the requirements of subparagraphs (a) or (b) of this paragraph but the competent authority of the first-mentioned Contracting State determines that the conditions for denying a benefit under this Convention in paragraph 1 of Article 27 do not exist. The competent authority of the first-mentioned Contracting State shall consult the competent authority of the other Contracting State before refusing to grant benefits of this Convention under this subparagraph.
(ii) each of which, if it directly held the shares in respect of which the dividends are paid, would be entitled to equivalent benefits in respect of such dividends under a tax treaty between the State of which that company is a resident and the Contracting State of which the company paying the dividends is a resident; or
4.
Notwithstanding the provisions of subparagraph (b) of paragraph 2 , dividends shall not be taxed in the Contracting State of which the company paying the dividends is a resident if the beneficial owner of the dividends directly holds less than 10 per cent of the voting power in the company paying the dividends, the beneficial owner is not able to directly or indirectly determine the identity of one or more persons who make the decisions that comprise the control and direction of the operations of the company paying the dividends, and the beneficial owner is: (a) a Contracting State, or political subdivision or a local authority thereof (including a government investment fund); (b) the Reserve Bank of Australia or the Central Bank of Iceland; (c) in the case of Australia, a recognised pension fund of Australia or a resident of Australia deriving such dividends from the carrying on of complying superannuation activities; or (d) in the case of Iceland, a recognised pension fund of Iceland whose income is exempt from Icelandic tax.
5.
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 other amounts which are 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 for the purposes of its tax.
6.
The provisions of paragraphs 1 , 2 , 3 and 4 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 shall apply.
7.
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 - being dividends beneficially owned by a person who is not a resident of the other Contracting State - except 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 such other State.
8.
Notwithstanding paragraph 7 , dividends paid by a company that is deemed to be a resident only of one Contracting State pursuant to paragraph 3 of Article 4 may be taxed in the other Contracting State, but only to the extent that the dividends are paid out of profits arising in that other Contracting State. Where such dividends are beneficially owned by a resident of the first-mentioned State, paragraph 2 of this Article shall apply as if the company paying the dividends were a resident only of the other State.
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