Convention for the avoidance of double taxation between Latvia and Cyprus
A Convention, for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, has been concluded between Cyprus and Latvia on 24 May 2016. Also, the convention aims to prevent the fiscal evasion when with respect to the income tax in Latvia and Cyprus.
Taxation of dividends in Latvia and Cyprus
The Convention defines that dividends paid by a company - a Contracting State a resident of the other Contracting State may be taxed in that other State. However, such dividends may also be taxed according to the tax laws in Latvia or Cyprus, or the Contracting State which is a resident company paying the dividend, but if the actual beneficiary of the dividends is a resident of the other Contracting State the tax so charged shall not exceed:
- 0 percent of the gross amount of the dividends if the beneficial owner is a company
-10 percent of the gross amount of the dividends in all other cases.
Taxation of interest in Latvia and Cyprus
The agreement regulates that interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. However, such interest may be taxed according to the laws of the Contracting State in which it arises, but if the interest the beneficial owner is a resident of the other Contracting State, the tax so charged shall not exceed:
- 0 per cent of the gross amount of the interest paid by a company which is a resident of a Contracting State in the other Contracting State by a resident entity (other than a partnership) and it is the actual beneficiary of the interest;
-10 per cent of the gross amount of all other cases.
Taxation of royalties in Latvia and Cyprus
Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. However, such royalties may also be taxed according to the laws of the Contracting State in which they are incurred, but if free the beneficial owner is a resident of the other Contracting State the tax so charged shall not exceed:
- 0 per cent of the gross amount of royalties if the royalties are Contracting State company of the other Contracting State to the public (other than a partnership) and is free of the beneficial owner;
- 5 per cent of the gross amount of royalties in all other cases.
The Convention is perfectly clear example how the matters on the double taxation in Latvia and Cyprus could be solved and especially elimination of double taxation in Latvia and Cyprus. If a Latvian resident derives income which, in accordance with this Convention may be taxed in Cyprus, then, unless the Latvian national legislation favorable treatment is provided, Latvia shall allow to reduce the income of that resident tax on an amount equal to the income tax paid in Cyprus, as indicate article 23 of the Convention.
Article 28 concludes, that the Convention enters into force when Contracting Governments through diplomatic channels in writing notify each other that the constitutional requirements for entry into force of this Convention. The Convention entered into force the last date of the notice and its provisions shall have effect in both Contracting States.
To find out more about the double taxation in Latvia, please contact our English-speaking lawyers at: info@gencs.eu
T: +371 67 24 00 90
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