Canada's treaties - Article 10

Without the tax treaty, dividends paid by a company in Canada to a person in another country would be subject to a 25% withholding tax.  This withholding is a "final tax" under Part XIII of the Income Tax Act.

Dividends being paid into Canada would have a withholding tax that is dependant on that country's tax laws.  What constitutes a dividend payment is defined in the treaty but normally defaults to the specific country tax laws.

Article 10 of the treaty does not necessarily eliminate the withholding tax on dividends but does reduce the amount of withholding at the source country level.  The percent to be withheld for Canadian purposes is most easily found by checking the non-resident tax calculator on the CRA website.  Most treaties, such as the Canada-Denmark treaty, have different rates of withholding depending on the recipient.  If the recipient is another corporation that owns shares or voting power, the withholding is often lower.