CONVENTION
BETWEEN THE REPUBLIC OF LATVIA AND THE PRINCIPALITY OF
ANDORRA
FOR THE ELIMINATION OF DOUBLE TAXATION WITH RESPECT TO TAXES ON
INCOME AND ON CAPITAL AND THE PREVENTION OF TAX EVASION AND
AVOIDANCE
The Republic of Latvia and the Principality of Andorra,
Desiring to further develop their economic relationship and to
enhance their cooperation in tax matters,
Intending to conclude a Convention for the elimination of
double taxation with respect to taxes on income and on capital
without creating opportunities for non-taxation or reduced
taxation through tax evasion or avoidance (including through
treaty-shopping arrangements aimed at obtaining reliefs provided
in this Convention for the indirect benefit of residents of third
States),
Have agreed as follows:
Article 1
PERSONS COVERED
1. This Convention shall apply to persons who are residents of
one or both of the Contracting States.
2. For the purposes of this Convention, income derived by or
through an entity or arrangement that is treated as wholly or
partly fiscally transparent under the tax law of either
Contracting State shall be considered to be income of a resident
of a Contracting State but only to the extent that the income is
treated, for purposes of taxation by that State, as the income of
a resident of that State. For the purposes of this paragraph, the
term "fiscally transparent" means situations where,
under the tax law of a Contracting State, income or part thereof
of an entity or arrangement is taxed not at the level of the
entity or arrangement but at the level of the persons who have an
interest in that entity or arrangement as if that income or part
thereof were directly derived by such persons at the time when
that income or part thereof is realised whether or not that
income or part thereof is distributed by that entity or
arrangement to such persons.
Article 2
TAXES COVERED
1. This Convention shall apply to taxes on income and on
capital imposed on behalf of a Contracting State or of its
political subdivisions or of its local authorities, irrespective
of the manner in which they are levied.
2. There shall be regarded as taxes on income and on capital
all taxes imposed on total income, on total capital, or on
elements of income or of capital, including taxes on gains from
the alienation of movable or immovable property, as well as taxes
on capital appreciation.
3. The existing taxes to which the Convention shall apply are
in particular:
a) in Andorra:
(i) corporate income tax (impost sobre societats);
(ii) personal income tax (impost sobre la renda de les
persones fķsiques);
(iii) tax on income for fiscal non-residents (impost sobre la
renda dels no-residents fiscals);
(hereinafter referred to as "Andorran tax");
b) in Latvia:
(i) the enterprise income tax (uzņēmumu ienākuma
nodoklis);
(ii) the personal income tax (iedzīvotāju ienākuma
nodoklis);
(iii) the immovable property tax (nekustamā īpašuma
nodoklis);
(hereinafter referred to as "Latvian tax").
4. The Convention shall apply also to any identical or
substantially similar taxes that are imposed after the date of
signature of the Convention in addition to, or in place of, the
existing taxes. The competent authorities of the Contracting
States shall notify each other of any significant changes that
have been made in their taxation laws.
Article 3
GENERAL DEFINITIONS
1. For the purposes of this Convention, unless the context
otherwise requires:
a) the term "Andorra" means the Principality of
Andorra and, when used in a geographical sense, means the
territory of the Principality of Andorra;
b) the term "Latvia" means the Republic of Latvia
and, when used in the geographical sense, means the territory of
the Republic of Latvia and any other area adjacent to the
territorial waters of the Republic of Latvia within which under
the laws of Latvia and in accordance with international law, the
rights of Latvia may be exercised with respect to the sea bed and
its sub-soil and their natural resources;
c) the term "person" includes an individual, a
company and any other body of persons;
d) the term "company" means any body corporate or
any entity that is treated as a body corporate for tax
purposes;
e) the terms "enterprise of a Contracting State" and
"enterprise of the other Contracting State" mean
respectively an enterprise carried on by a resident of a
Contracting State and an enterprise carried on by a resident of
the other Contracting State;
f) the term "international traffic" means any
transport by a ship or aircraft except when the ship or aircraft
is operated solely between places in a Contracting State and the
enterprise that operates the ship or aircraft is not an
enterprise of that State;
g) the term "competent authority" means:
(i) in Andorra, the Minister in charge of Finance or its
authorised representative;
(ii) in Latvia, the Ministry of Finance or its authorised
representative;
h) the term "national", in relation to a Contracting
State, means:
(i) any individual possessing the nationality of that
Contracting State; and
(ii) any legal person, partnership or association deriving its
status as such from the laws in force in that Contracting
State;
i) the term "recognised pension fund" of a State
means an entity or arrangement established in that State that is
treated as a separate person under the taxation laws of that
State and:
(i) that is established and operated exclusively or almost
exclusively to administer or provide retirement benefits and
ancillary or incidental benefits to individuals and that is
regulated as such by that State or one of its political
subdivisions or local authorities; or
(ii) that is established and operated exclusively or almost
exclusively to invest funds for the benefit of entities or
arrangements referred to in subdivision (i);
j) the term "enterprise" applies to the carrying on
of any business;
k) the term "business" includes the performance of
professional services and of other activities of an independent
character.
2. As regards the application of the Convention at any time by
a Contracting State, any term not defined therein shall, unless
the context otherwise requires or the competent authorities agree
to a different meaning pursuant to the provisions of Article 24,
have the meaning that it has at that time under the law of that
State for the purposes of the taxes to which the Convention
applies, any meaning under the applicable tax laws of that State
prevailing over a meaning given to the term under other laws of
that State.
Article 4
RESIDENT
1. For the purposes of this Convention, the term
"resident of a Contracting State" means any person who,
under the laws of that State, is liable to tax therein by reason
of his domicile, residence, place of management, place of
incorporation or any other criterion of a similar nature, and
also includes that State and any political subdivision or local
authority thereof as well as a recognised pension fund of that
State. This term, however, does not include any person who is
liable to tax in that State in respect only of income from
sources in that State or capital situated therein.
2. Where by reason of the provisions of paragraph 1 an
individual is a resident of both Contracting States, then his
status shall be determined as follows:
a) he shall be deemed to be a resident only of the State in
which he has a permanent home available to him; if he has a
permanent home available to him in both States, he shall be
deemed to be a resident only of the State with which his personal
and economic relations are closer (centre of vital
interests);
b) if the State in which he has his centre of vital interests
cannot be determined, or if he has not a permanent home available
to him in either State, he shall be deemed to be a resident only
of the State in which he has an habitual abode;
c) if he has an habitual abode in both States or in neither of
them, he shall be deemed to be a resident only of the State of
which he is a national;
d) if he is a national of both States or of neither of them,
the competent authorities of the Contracting States shall settle
the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a person
other than an individual is a resident of both Contracting
States, the competent authorities of the Contracting States shall
endeavour to determine by mutual agreement the Contracting State
of which such person shall be deemed to be a resident for the
purposes of the Convention, having regard to its place of
effective management, the place where it is incorporated or
otherwise constituted and any other relevant factors. In the
absence of such agreement, such person shall not be entitled to
any relief or exemption from tax provided by this Convention
except to the extent and in such manner as may be agreed upon by
the competent authorities of the Contracting States.
Article 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Convention, the term
"permanent establishment" means a fixed place of
business through which the business of an enterprise is wholly or
partly carried on.
2. The term "permanent establishment" includes
especially:
a) a place of management;
b) a branch;
c) an office;
d) a factory;
e) a workshop;
f) a mine, an oil or gas well, a quarry or any other place of
extraction of natural resources; and
g) an agricultural, pastoral or forestry exploitation.
3. The term "permanent establishment" also
includes:
a) a building site or construction or installation project
only if it lasts more than twelve months;
b) a building site or construction or installation project
commencing during a period of ten years immediately
following the date of entry into force of this Convention, only
if it lasts more than nine months. At the end of this period of
ten years, the provisions of sub-paragraph a) shall apply;
c) activities carried on offshore in a Contracting State in
connection with the exploration or exploitation of the sea bed
and sub-soil and their natural resources situated in that State,
if such activities are carried on for a period or periods
exceeding in the aggregate 30 days in any twelve month period
commencing or ending in the taxable period concerned.
4. Notwithstanding the preceding provisions of this Article,
the term "permanent establishment" shall be deemed not
to include:
a) the use of facilities solely for the purpose of storage,
display or delivery of goods or merchandise belonging to the
enterprise;
b) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of storage,
display or delivery;
c) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of processing
by another enterprise;
d) the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise or of collecting
information, for the enterprise;
e) the maintenance of a fixed place of business solely for the
purpose of carrying on, for the enterprise, any other activity of
a preparatory or auxiliary character;
f) the maintenance of a fixed place of business solely for any
combination of activities mentioned in subparagraphs a) to e),
provided that the overall activity of the fixed place of business
resulting from this combination is of a preparatory or auxiliary
character.
5. Notwithstanding the provisions of paragraphs 1 and 2 but
subject to the provisions of paragraph 6, where a person is
acting in a Contracting State on behalf of an enterprise and, in
doing so, habitually concludes contracts, or habitually plays the
principal role leading to the conclusion of contracts that are
routinely concluded without material modification by the
enterprise, and these contracts are
a) in the name of the enterprise, or
b) for the transfer of the ownership of, or for the
granting of the right to use, property owned by that enterprise
or that the enterprise has the right to use, or
c) for the provision of services by that enterprise,
that enterprise shall be deemed to have a permanent
establishment in that State in respect of any activities which
that person undertakes for the enterprise, unless the activities
of such person are limited to those mentioned in
paragraph 4 which, if exercised through a fixed place
of business, would not make this fixed place of business a
permanent establishment under the provisions of that
paragraph.
6. An enterprise shall not be deemed to have a permanent
establishment in a Contracting State merely because it carries on
business in that State through a broker, general commission agent
or any other agent of an independent status, provided that such
persons are acting in the ordinary course of their business.
7. The fact that a company which is a resident of a
Contracting State controls or is controlled by a company which is
a resident of the other Contracting State, or which carries on
business in that other State (whether through a permanent
establishment or otherwise), shall not of itself constitute
either company a permanent establishment of the other.
Article 6
INCOME FROM IMMOVABLE PROPERTY
1. Income derived by a resident of a Contracting State from
immovable property (including income from agriculture or
forestry) situated in the other Contracting State may be taxed in
that other State.
2. The term "immovable property" shall have the
meaning which it has under the law of the Contracting State in
which the property in question is situated. The term shall in any
case include property accessory to immovable property, livestock
and equipment used in agriculture and forestry, rights to which
the provisions of general law respecting landed property apply,
any option or similar right to acquire immovable property,
usufruct of immovable property and rights to variable or fixed
payments as consideration for the working of, or the right to
work, mineral deposits, sources and other natural resources,
rights to assets to be produced by the exploration or
exploitation of the sea bed and sub-soil and their natural
resources, including rights to interests in or to the benefit of
such assets; ships and aircraft shall not be regarded as
immovable property.
3. The provisions of paragraph 1 shall apply to income derived
from the direct use, letting, or use in any other form of
immovable property.
4. The provisions of paragraphs 1 and 3 shall also apply to
the income from immovable property of an enterprise.
Article 7
BUSINESS PROFITS
1. Profits of an enterprise of a Contracting State shall be
taxable only in that State unless the enterprise carries on
business in the other Contracting State through a permanent
establishment situated therein. If the enterprise carries on
business as aforesaid, the profits of the enterprise may be taxed
in the other State but only so much of them as is attributable to
that permanent establishment.
2. Subject to the provisions of paragraph 3, where an
enterprise of a Contracting State carries on business in the
other Contracting State through a permanent establishment
situated therein, there shall in each Contracting State be
attributed to that permanent establishment the profits which it
might be expected to make if it were a distinct and separate
enterprise engaged in the same or similar activities under the
same or similar conditions and dealing wholly independently with
the enterprise of which it is a permanent establishment.
3. In determining the profits of a permanent establishment in
a Contracting State, there shall be allowed as deductions
expenses which are incurred for the purposes of the permanent
establishment, including executive and general administrative
expenses so incurred, whether in the State in which the permanent
establishment is situated or elsewhere. The expenses to be
allowed as deductions by a Contracting State shall include only
expenses that are deductible under the domestic laws of that
State.
4. No profits shall be attributed to a permanent establishment
by reason of the mere purchase by that permanent establishment of
goods or merchandise for the enterprise.
5. For the purposes of the preceding paragraphs, the profits
to be attributed to the permanent establishment shall be
determined by the same method year by year unless there is good
and sufficient reason to the contrary.
6. Where profits include items of income which are dealt with
separately in other Articles of this Convention, then the
provisions of those Articles shall not be affected by the
provisions of this Article.
Article 8
INTERNATIONAL SHIPPING AND AIR TRANSPORT
1. Profits of an enterprise of a Contracting State from the
operation of ships or aircraft in international traffic shall be
taxable only in that State.
2. The provisions of paragraph 1 shall also apply to profits
from the participation in a pool, a joint business or an
international operating agency.
Article 9
ASSOCIATED ENTERPRISES
1. Where
a) an enterprise of a Contracting State participates directly
or indirectly in the management, control or capital of an
enterprise of the other Contracting State, or
b) the same persons participate directly or indirectly in the
management, control or capital of an enterprise of a Contracting
State and an enterprise of the other Contracting State,
and in either case conditions are made or imposed between the
two enterprises in their commercial or financial relations which
differ from those which would be made between independent
enterprises, then any profits which would, but for those
conditions, have accrued to one of the enterprises, but, by
reason of those conditions, have not so accrued, may be included
in the profits of that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an
enterprise of that State - and taxes accordingly - profits on
which an enterprise of the other Contracting State has been
charged to tax in that other State and the profits so included
are profits which would have accrued to the enterprise of the
first-mentioned State if the conditions made between the two
enterprises had been those which would have been made between
independent enterprises, then that other State shall make an
appropriate adjustment to the amount of the tax charged therein
on those profits. In determining such adjustment, due regard
shall be had to the other provisions of this 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, 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) 0 per cent of the gross amount of the dividends if the
beneficial owner is a company (other than a partnership);
b) 10 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. The term "dividends" as used in this Article
means income from shares, "jouissance" shares or
"jouissance" rights, mining shares, founders' shares or
other rights, not being debt-claims, participating in profits, as
well as income from other 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.
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 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.
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 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.
Article 11
INTEREST
1. Interest arising in a Contracting State and paid to a
resident of the other Contracting State may be taxable in that
other State.
2. However, interest arising in a Contracting State may also
be taxed in that State according to the laws of that State, but
if the beneficial owner of the interest is a resident of the
other Contracting State, the tax so charged shall not exceed:
a) 0 per cent of the gross amount of the interest if the
interest is paid by a company that is a resident of a Contracting
State to a company (other than a partnership) that is a resident
of the other Contracting State and is the beneficial owner of the
interest;
b) 10 per cent of the gross amount of the interest in all
other cases.
3. Notwithstanding the provisions of subparagraph b) of
paragraph 2 interest arising in a Contracting State, derived and
beneficially owned by the Government of the other Contracting
State, including its local authorities, the Central Bank or any
financial institution wholly owned by that Government, or
interest derived on loans guaranteed by that Government, shall be
exempt from tax in the first-mentioned State.
4. The term "interest" as used in this Article means
income from debt-claims of every kind, whether or not secured by
mortgage, and in particular, income from government securities
and income from bonds or debentures, including premiums and
prizes attaching to such securities, bonds or debentures. The
term "interest" shall not include any income which is
treated as a dividend under the provisions of Article 10. Penalty
charges for late payment shall not be regarded as interest for
the purpose of this Article.
5. The provisions of paragraphs 1, 2 and 3 shall not apply if
the beneficial owner of the interest, being a resident of a
Contracting State, carries on business in the other Contracting
State in which the interest arises through a permanent
establishment situated therein and the debt-claim in respect of
which the interest is paid is effectively connected with such
permanent establishment. In such case the provisions of Article 7
shall apply.
6. Interest shall be deemed to arise in a Contracting State
when the payer is a resident of that State. Where, however, the
person paying the interest, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent
establishment in connection with which the indebtedness on which
the interest is paid was incurred, and such interest is borne by
such permanent establishment, then such interest shall be deemed
to arise in the State in which the permanent establishment is
situated.
7. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some
other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds the amount which would
have been agreed upon by the payer and the beneficial owner in
the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount. In such case, the
excess part of the payments shall remain taxable according to the
laws of each Contracting State, due regard being had to the other
provisions of this Convention.
Article 12
ROYALTIES
1. Royalties arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that
other State.
2. However, royalties arising in a Contracting State may also
be taxed in that State according to the laws of that State, but
if the beneficial owner of the royalties is a resident of the
other Contracting State, the tax so charged shall not exceed 5
per cent of the gross amount of the royalties.
3. The term "royalties" as used in this Article
means payments of any kind received as a consideration for the
use of, or the right to use, any copyright of literary, artistic
or scientific work including cinematograph films, any patent,
trade mark, design or model, plan, secret formula or process or
for information concerning industrial, commercial or scientific
experience.
4. The provisions of paragraphs 1 and 2 shall not apply if the
beneficial owner of the royalties, being a resident of a
Contracting State, carries on business in the other Contracting
State in which the royalties arise, through a permanent
establishment situated therein and the right or property in
respect of which the royalties are paid is effectively connected
with such permanent establishment. In such case the provisions of
Article 7 shall apply.
5. Royalties shall be deemed to arise in a Contracting State
when the payer is a resident of that State. Where, however, the
person paying the royalties, whether he is a resident of a
Contracting State or not, has in a Contracting State a permanent
establishment in connection with which the liability to pay the
royalties was incurred, and such royalties are borne by such
permanent establishment, then such royalties shall be deemed to
arise in the State in which the permanent establishment is
situated.
6. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some
other person, the amount of the royalties, having regard to the
use, right or information for which they are paid, exceeds the
amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned
amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State,
due regard being had to the other provisions of this
Convention.
Article 13
CAPITAL GAINS
1. Gains derived by a resident of a Contracting State from the
alienation of immovable property referred to in Article 6 and
situated in the other Contracting State may be taxed in that
other State.
2. Gains from the alienation of movable property forming part
of the business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting
State, including such gains from the alienation of such a
permanent establishment (alone or with the whole enterprise), may
be taxed in that other State.
3. Gains that an enterprise of a Contracting State that
operates ships or aircraft in international traffic derives from
the alienation of such ships or aircraft, or of movable property
pertaining to the operation of such ships or aircraft, shall be
taxable only in that State.
4. Gains derived by a resident of a Contracting State from the
alienation of shares or comparable interests, such as interests
in a partnership or trust, may be taxed in the other Contracting
State if, at any time during the 365 days preceding the
alienation, these shares or comparable interests derived more
than 50 per cent of their value directly or indirectly from
immovable property, as defined in Article 6, situated in that
other State.
5. Gains from the alienation of any property other than that
referred to in paragraphs 1, 2, 3 and 4, shall be taxable only in
the Contracting State of which the alienator is a resident.
Article 14
INCOME FROM EMPLOYMENT
1. Subject to the provisions of Articles 15, 17 and 18,
salaries, wages and other similar remuneration derived by a
resident of a Contracting State in respect of an employment shall
be taxable only in that State unless the employment is exercised
in the other Contracting State. If the employment is so
exercised, such remuneration as is derived therefrom may be taxed
in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration
derived by a resident of a Contracting State in respect of an
employment exercised in the other Contracting State shall be
taxable only in the first-mentioned State if:
a) the recipient is present in the other State for a period or
periods not exceeding in the aggregate 183 days in any twelve
month period commencing or ending in the fiscal year concerned,
and
b) the remuneration is paid by, or on behalf of, an employer
who is not a resident of the other State, and
c) the remuneration is not borne by a permanent establishment
which the employer has in the other State.
3. Notwithstanding the preceding provisions of this Article,
remuneration derived in respect of an employment exercised aboard
a ship or aircraft operated in international traffic by an
enterprise of a Contracting State may be taxed in that State.
Article 15
DIRECTORS' FEES
Directors' fees and other similar payments derived by a
resident of a Contracting State in his capacity as a member of
the board of directors or any other similar organ of a company
which is a resident of the other Contracting State may be taxed
in that other State.
Article 16
ENTERTAINERS AND SPORTSPERSONS
1. Notwithstanding the provisions of Article 14, income
derived by a resident of a Contracting State as an entertainer,
such as a theatre, motion picture, radio or television artiste,
or a musician, or as a sportsperson, from that resident's
personal activities as such exercised in the other Contracting
State, may be taxed in that other State.
2. Where income in respect of personal activities exercised by
an entertainer or a sportsperson acting as such accrues not to
the entertainer or sportsperson but to another person, that
income may, notwithstanding the provisions of Article 14, be
taxed in the Contracting State in which the activities of the
entertainer or sportsperson are exercised.
3. The provisions of paragraphs 1 and 2 shall not apply to
income derived from activities exercised in a Contracting State
by entertainers or sportspersons if the visit to that State is
wholly or mainly supported by public funds of the other
Contracting State or political subdivisions or local authorities
thereof. In such a case, the income shall be taxable only in the
Contracting State of which the entertainer or the sportsperson is
a resident.
Article 17
PENSIONS
1. Subject to the provisions of paragraph 2 of Article 18,
pensions and other similar remuneration paid to a resident of a
Contracting State in consideration of past employment shall be
taxable only in that State.
2. Notwithstanding the provisions of paragraph 1 of this
Article and paragraph 2 of Article 18, pensions and other similar
remuneration paid under the social security system of a
Contracting State shall be taxable only in that State.
Article 18
GOVERNMENT SERVICE
1. a) Salaries, wages and other similar remuneration paid by a
Contracting State or a political subdivision or a local authority
thereof to an individual in respect of services rendered to that
State or subdivision or authority shall be taxable only in that
State.
b) However, such salaries, wages and other similar
remuneration shall be taxable only in the other Contracting State
if the services are rendered in that State and the individual is
a resident of that State who:
(i) is a national of that State; or
(ii) did not become a resident of that State solely for the
purpose of rendering the services.
2. a) Notwithstanding the provisions of paragraph 1, pensions
and other similar remuneration paid by, or out of funds created
by, a Contracting State or a political subdivision or a local
authority thereof to an individual in respect of services
rendered to that State or subdivision or authority shall be
taxable only in that State.
b) However, such pensions and other similar remuneration shall
be taxable only in the other Contracting State if the individual
is a resident of, and a national of, that State.
3. The provisions of Articles 14, 15, 16, and 17 shall apply
to salaries, wages, pensions, and other similar remuneration in
respect of services rendered in connection with a business
carried on by a Contracting State or a political subdivision or a
local authority thereof.
Article 19
STUDENTS
Payments which a student, a business apprentice or a trainee
who is or was immediately before visiting a Contracting State a
resident of the other Contracting State and who is present in the
first-mentioned State solely for the purpose of his education or
training receives for the purpose of his maintenance, education
or training shall not be taxed in that State, provided that such
payments arise from sources outside that State.
Article 20
OTHER INCOME
1. Items of income of a resident of a Contracting State,
wherever arising, not dealt with in the foregoing Articles of
this Convention shall be taxable only in that State.
2. The provisions of paragraph 1 shall not apply to income,
other than income from immovable property as defined in paragraph
2 of Article 6, if the recipient of such income, being a resident
of a Contracting State, carries on business in the other
Contracting State through a permanent establishment situated
therein and the right or property in respect of which the income
is paid is effectively connected with such permanent
establishment. In such case the provisions of Article 7 shall
apply.
Article 21
CAPITAL
1. Capital represented by immovable property referred to in
Article 6, owned by a resident of a Contracting State and
situated in the other Contracting State, may be taxed in that
other State.
2. Capital represented by movable property forming part of the
business property of a permanent establishment which an
enterprise of a Contracting State has in the other Contracting
State may be taxed in that other State.
3. Capital of an enterprise of a Contracting State that
operates ships or aircraft in international traffic represented
by such ships or aircraft, and by movable property pertaining to
the operation of such ships or aircraft, shall be taxable only in
that State.
4. All other elements of capital of a resident of a
Contracting State shall be taxable only in that State.
Article 22
ELIMINATION OF DOUBLE TAXATION
1. In Andorra, double taxation shall be eliminated as
follows:
Subject to the provisions of the law of Andorra regarding the
elimination of double taxation which shall not affect the general
principle hereof, double taxation shall be eliminated as
follows:
a) Where a resident of Andorra derives income or owns capital
which, in accordance with the provisions of this Convention, may
be taxed in Latvia, Andorra shall allow as a deduction from the
tax of that resident an amount equal to the tax paid in
Latvia.
Such deduction shall not, however, exceed that part of the
Andorran tax, as computed before the deduction is given, which is
attributable to the income derived from or to the capital owned
in Latvia.
b) Where a resident of Andorra derives income or owns capital
which, in accordance with the provisions of this Convention, is
exempt from tax in Andorra, Andorra may in order to calculate the
amount of tax on the remaining income or capital of the resident,
take into account the income or capital that has been
exempted.
2. In Latvia, double taxation shall be eliminated as
follows:
Where a resident of Latvia derives income or owns capital
which, in accordance with this Convention, may be taxed in
Andorra, unless a more favourable treatment is provided in its
domestic law, Latvia shall allow:
a) as a deduction from the tax on the income of that resident,
an amount equal to the income tax paid thereon in Andorra;
b) as a deduction from the tax on the capital of that
resident, an amount equal to the capital tax paid thereon in
Andorra.
Such deduction in either case shall not, however, exceed that
part of the income tax or capital tax in Latvia, as computed
before the deduction is given, which is attributable, as the case
may be, to the income or the capital which may be taxed in
Andorra.
Article 23
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected in
the other Contracting State to any taxation or any requirement
connected therewith, which is other or more burdensome than the
taxation and connected requirements to which nationals of that
other State in the same circumstances, in particular with respect
to residence, are or may be subjected. This provision shall,
notwithstanding the provisions of Article 1, also apply to
persons who are not residents of one or both of the Contracting
States.
2. Stateless persons who are residents of a Contracting State
shall not be subjected in either Contracting State to any
taxation or any requirement connected therewith, which is other
or more burdensome than the taxation and connected requirements
to which nationals of the State concerned in the same
circumstances, in particular with respect to residence, are or
may be subjected.
3. The taxation on a permanent establishment which an
enterprise of a Contracting State has in the other Contracting
State shall not be less favourably levied in that other State
than the taxation levied on enterprises of that other State
carrying on the same activities. This provision shall not be
construed as obliging a Contracting State to grant to residents
of the other Contracting State any personal allowances, reliefs
and reductions for taxation purposes on account of civil status
or family responsibilities which it grants to its own
residents.
4. Except where the provisions of paragraph 1 of Article 9,
paragraph 7 of Article 11, or paragraph 6 of Article 12, apply,
interest, royalties and other disbursements paid by an enterprise
of a Contracting State to a resident of the other Contracting
State shall, for the purpose of determining the taxable profits
of such enterprise, be deductible under the same conditions as if
they had been paid to a resident of the first-mentioned State.
Similarly, any debts of an enterprise of a Contracting State to a
resident of the other Contracting State shall, for the purpose of
determining the taxable capital of such enterprise, be deductible
under the same conditions as if they had been contracted to a
resident of the first-mentioned State.
5. Enterprises of a Contracting State, the capital of which is
wholly or partly owned or controlled, directly or indirectly, by
one or more residents of the other Contracting State, shall not
be subjected in the first-mentioned State to any taxation or any
requirement connected therewith which is other or more burdensome
than the taxation and connected requirements to which other
similar enterprises of the first-mentioned State are or may be
subjected.
6. The provisions of this Article shall, notwithstanding the
provisions of Article 2, apply to taxes of every kind and
description.
Article 24
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of
the Contracting States result or will result for him in taxation
not in accordance with the provisions of this Convention, he may,
irrespective of the remedies provided by the domestic law of
those States, present his case to the competent authority of
either Contracting State. The case must be presented within three
years from the first notification of the action resulting in
taxation not in accordance with the provisions of the
Convention.
2. The competent authority shall endeavour, if the objection
appears to it to be justified and if it is not itself able to
arrive at a satisfactory solution, to resolve the case by mutual
agreement with the competent authority of the other Contracting
State, with a view to the avoidance of taxation which is not in
accordance with the Convention. Any agreement reached shall be
implemented notwithstanding any time limits in the domestic law
of the Contracting States.
3. The competent authorities of the Contracting States shall
endeavour to resolve by mutual agreement any difficulties or
doubts arising as to the interpretation or application of the
Convention. They may also consult together for the elimination of
double taxation in cases not provided for in the Convention.
4. The competent authorities of the Contracting States may
communicate with each other directly, including through a joint
commission consisting of themselves or their representatives, for
the purpose of reaching an agreement in the sense of the
preceding paragraphs.
Article 25
EXCHANGE OF INFORMATION
1. The competent authorities of the Contracting States shall
exchange such information as is foreseeably relevant for carrying
out the provisions of this Convention or to the administration or
enforcement of the domestic laws concerning taxes of every kind
and description imposed on behalf of the Contracting States, or
of their political subdivisions or local authorities, insofar as
the taxation thereunder is not contrary to the Convention. The
exchange of information is not restricted by Articles 1 and
2.
2. Any information received under paragraph 1 by a Contracting
State shall be treated as secret in the same manner as
information obtained under the domestic laws of that State and
shall be disclosed only to persons or authorities (including
courts and administrative bodies) concerned with the assessment
or collection of, the enforcement or prosecution in respect of,
the determination of appeals in relation to the taxes referred to
in paragraph 1, or the oversight of the above. Such persons or
authorities shall use the information only for such purposes.
They may disclose the information in public court proceedings or
in judicial decisions. Notwithstanding the foregoing, information
received by a Contracting State may be used for other purposes
when such information may be used for such other purposes under
the laws of both States and the competent authority of the
supplying State authorises such use.
3. In no case shall the provisions of paragraphs 1 and 2 be
construed so as to impose on a Contracting State the
obligation:
a) to carry out administrative measures at variance with the
laws and administrative practice of that or of the other
Contracting State;
b) to supply information which is not obtainable under the
laws or in the normal course of the administration of that or of
the other Contracting State;
c) to supply information which would disclose any trade,
business, industrial, commercial or professional secret or trade
process, or information the disclosure of which would be contrary
to public policy (ordre public).
4. If information is requested by a Contracting State in
accordance with this Article, the other Contracting State shall
use its information gathering measures to obtain the requested
information, even though that other State may not need such
information for its own tax purposes. The obligation contained in
the preceding sentence is subject to the limitations of paragraph
3 but in no case shall such limitations be construed to permit a
Contracting State to decline to supply information solely because
it has no domestic interest in such information.
5. In no case shall the provisions of paragraph 3 be construed
to permit a Contracting State to decline to supply information
solely because the information is held by a bank, other financial
institution, nominee or person acting in an agency or a fiduciary
capacity or because it relates to ownership interests in a
person.
Article 26
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS
Nothing in this Convention shall affect the fiscal privileges
of members of diplomatic missions or consular posts under the
general rules of international law or under the provisions of
special agreements.
Article 27
ENTITLEMENT TO BENEFITS
Notwithstanding the other provisions of this Convention, a
benefit under this Convention shall not be granted in respect of
an item of income or capital if it is reasonable to conclude,
having regard to all relevant facts and circumstances, that
obtaining that benefit was one of the principal purposes of any
arrangement or transaction that resulted directly or indirectly
in that benefit, unless it is established that granting that
benefit in these circumstances would be in accordance with the
object and purpose of the relevant provisions of this Convention.
Before a resident of a Contracting State is denied such benefits
in the other Contracting State by reason of the preceding
sentence, the competent authorities of the Contracting States may
consult with each other.
Article 28
ENTRY INTO FORCE
1. The Contracting States shall notify each other in writing
through diplomatic channels when the constitutional requirements
for the entry into force of this Convention have been complied
with.
2. The Convention shall enter into force on the date of the
later of the notifications referred to in paragraph 1 and
its provisions shall have effect in both Contracting States:
a) in respect of taxes withheld at source, on income derived
on or after the first day of January of the calendar year next
following the year in which the Convention enters into force;
b) in respect of other taxes on income and taxes on capital,
for taxes chargeable for any taxable period beginning on or after
the first day of January of the calendar year next following the
year in which the Convention enters into force.
Article 29
TERMINATION
This Convention shall remain in force until terminated by a
Contracting State. Either Contracting State may terminate the
Convention, through diplomatic channels, by giving written notice
of termination at least six months before the end of any calendar
year after the expiration of a period of five years from the date
of its entry into force. In such event, the Convention shall
cease to have effect in both Contracting States:
a) in respect of taxes withheld at source, on income derived
on or after the first day of January of the calendar year next
following the year in which the notice has been given;
b) in respect of other taxes on income and taxes on capital,
for taxes chargeable for any taxable period beginning on or after
the first day of January in the calendar year next following the
year in which the notice has been given.
In witness whereof, the undersigned, duly authorised thereto,
have signed this Convention.
Done in duplicate in two originals at New York this
21st day of September 2024, in the Latvian, Catalan
and English languages, all texts being equally authentic. In the
case of divergence of interpretation the English text shall
prevail.
|
For the Republic of Latvia
Baiba Braže
|
For the Principality of
Andorra
Imma Tor Faus
|
PROTOCOL
At the signing today of the Convention between the Republic of
Latvia and the Principality of Andorra for the elimination of
double taxation with respect to taxes on income and on capital
and the prevention of tax evasion and avoidance, the undersigned
have agreed upon the following provisions, which shall form an
integral part of this Convention:
1. With reference to subparagraph i) of paragraph 1 of Article
3 (General Definitions):
It is understood that the term "recognised pension
fund" also includes an investment management company
managing funds of investment plans of state funded pension
schemes including the funds invested by such companies, subject
to the requirements of subdivisions (i) and (ii) of the referred
subparagraph.
2. With reference to paragraph 2 of Article 6 (Income from
Immovable Property):
It is understood that the term "options" covers
agreements granting a right, without imposing any obligation, to
purchase or sell immovable property for a determined price within
a specified period of time.
3. With reference to paragraph 3 of Article
6 (Income from Immovable Property) and paragraph 1
Article 13 (Capital Gains):
It is understood that all income and gains from the alienation
of immovable property referred to in Article 6 and situated in a
Contracting State may be taxed in that State in accordance with
the provisions of Article 13.
4. With reference to paragraph 2 of Article
10 (Dividends) and paragraph 2 Article 11
(Interests):
It is understood that the provisions of subparagraph a) of
paragraph 2 of Article 10 and subparagraph a) of paragraph 2 of
Article 11 shall also apply to dividends and interest paid to a
recognised pension fund.
5. With reference to Article 24 (Mutual Agreement
Procedure):
In the event that pursuant to an Agreement or Convention for
the avoidance of double taxation which will be signed after the
date this Convention enters into force, an arbitration provision
is included, the competent authorities of Latvia and Andorra will
consult the possibility of starting negotiations to insert an
arbitration provision into this Convention.
6. With reference to Article 25 (Exchange of Information):
Notwithstanding the entry into force of the Convention,
requests for information may be made:
a) in respect to tax matters involving intentional conduct
which is liable to prosecution under the criminal laws of the
requesting Party, to taxable periods beginning on or after the
first day of January of 2013, or where there is no taxable
period, to all taxes arising on or after the first day of January
of 2013; and
b) in respect to other cases, to taxable periods beginning on
or after the first day of January of 2017 or, where there is no
taxable period, for all taxes arising on or after the first day
of January of 2017.
In witness whereof, the undersigned, duly authorised thereto,
have signed this Protocol.
Done in duplicate in two originals at New York this
21st day of September 2024, in the Latvian, Catalan
and English languages, all texts being equally authentic. In the
case of divergence of interpretation the English text shall
prevail.
|
For the Republic of
Latvia
Baiba Braže
|
For the Principality of
Andorra
Imma Tor Faus
|
