Latvian-Norway tax convention will be amended

The draft law of Protocol, amending Convention between the Kingdom of Norway and the Republic of Latvia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital, signed on July 19, 1993, has been announced on the meeting of State secretaries.

The amendments anticipate specifying the list of Latvian and Norway taxes, on which apply the Convention.

Also the draft law anticipates reducing the maximum tax rates on dividends in their home country from 5% to 0% if the owner of the dividends is a company owning at least 10% of the distributing company shares or having the right to vote and to reduce tax rate from 15% to 10% in all other cases.

At the same time it is planned to establish that interest paid to the company, which is the owner of interest and which owns at least 25% of the paying company's shares or voting shares, the tax is imposed only in the country of residence of the recipient.

In future it is anticipated to establish the maximum tax rate what can be withheld from pensions, including social security payments and annual payments in their home country. Up to now the Convention provided that such payments are imposed by tax according to the tax rates of the receiving state.

The new version of the Convention intends to expand the provisions of exchange of information and express them in compliance with the Model Convention of Organization for Economic Cooperation and Development, which intend to expand significantly the obligation of the parties to provide information for tax purposes, particularly with regard to information available by credit institutions.

The draft law has to be considered in the Cabinet of Ministers and Parliament of Latvia – Saeima.

Valters Gencs

Attorney at Law

Gencs Valters Law Firm, Riga

T: +371 67 24 00 90

Email: valters.gencs@gencs.eu