On November 3, 2016 the Swiss Federal Department of Finance (FDF) issued a press release announcing that on November 2, 2016 Switzerland and Latvia signed a protocol amending their existing DTA.

Although the Protocol has been signed, it has not entered into force yet. For the Protocol to enter into force, the respective ratification procedures have to have been finalized in both countries.

 

The Protocol a.o.:

 

Replaces the Article 10 (“Dividends”) of the existing DTA by a new Article 10 (“Dividends”). Under the new article 10 the Source State will not be allowed to withhold withholding taxes over dividends distributed to qualifying shareholders.

 

Replaces Article 11, Paragraph 2 (“Interest”) of the existing DTA by a new Article 11, Paragraph 2 (“Interest”) which arranges that in certain situations a Source State is not allowed to withhold withholding taxes over interest and maximizes the withholding tax that a Source State is allowed to withhold over such interest to 10 per cent of the gross amount of the interest in all other cases.

 

Replaces Article 12, Paragraph 2 (“Royalties”) of the existing DTA by a new Article 12, Paragraph 2 (“Royalties”) which arranges that in certain situations a Source State is not allowed to withhold withholding taxes over royalties and maximizes the withholding tax that a Source State is allowed to withhold over such interest to 5 per cent of the gross amount of the royalties in all other cases.

 

Inserts a new anti-abuse Article containing the so-called principal purpose test. (The new Article 22a).

 

Inserts new arbitration clause by adding new Paragraphs 5 and 6 to be added to Article 25 of the existing DTA.

 

Replaces the Article 26 (“Exchange of information”) of the existing DTA by a new Article 26 (“Exchange of information”).

 

Click on the language of your choice to be forwarded to the text of the Protocol amending the existing Swiss-Latvian DTA as made available in that language on the website of the Swiss FDF. (French or German)

 

 

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