It will promote greater economic cooperation between Latvia and Switzerland
Wednesday, 2 November, Finance Minister Dana Reizniece-oak and Swiss Ambassador Latvian Marcus Niklauss Paul Dutli ( Markus Niklaus Paul Dutly ) signed the Latvian Republic and the Government of the Swiss Federal Council Protocol amending the two parties on 31 January 2002 concluded the Convention for the Avoidance double taxation with respect to taxes on income and on capital. With the amendments to the Convention will be facilitated business Latvian and Switzerland, as well as facilitating investor activity and generally promote foreign investments in both countries.
“Š is the first convention on avoidance of double taxation protocol, which Latvia has signed since becoming a full member of Economic Cooperation and Development (OECD) member state. With the signing of the Protocol will not only strengthen the existing tax system, but also gaining momentum for the two countries to economic cooperation, including attracting foreign investments and business development. It must also be greater cooperation between the two countries the tax administration and the mutual exchange of information, ” states Minister of Finance Dana Reizniece-oak.
Latvian Republic and the Government of the Swiss Federal Council protocol is designed so that, by amending the Convention, to ensure both residents more favorable tax treatment when determining the maximum applicable tax rate on passive income as dividends, interest payments and royalties, which they discover Latvian or Switzerland.
Thus, dividends their country of origin shall be exempt from tax if the beneficial owner is a company – other Contracting State, other than a partnership, and which directly owns at least 10% of the company paying the dividend shares, whether it is a pension fund or other Contracting state Central Bank.
Will also reduce the maximum applicable tax rate, according to which the payment of interest and royalties are taxed in their country of origin, providing a 0% rate of interest and royalties, which the company – one Contracting State paid to a company which is a resident of the other country. Consequently, the investors will get clarity on the extent to which their revenue from the country of origin may be taxed. It should be noted that the level of taxation in the country of origin is greatly reduced.
Convention as amended by the Protocol will contribute to business Latvian and Latvian Switzerland and facilitate investors’ activities in Switzerland and vice versa, as well as a whole contribute to the attraction of foreign investments and significantly expanded both the national tax administrations with access to information for tax purposes with respect to its own residents. The bill will promote even closer Latvian and Swiss tax administration among them, an obligation to exchange information in accordance with Article 26 of the OECD Model 2005 version.