The Federal Republic of Germany and the Republic of Bolivia, at the signing of the Convention for the avoidance of double taxation with respect to taxes on income and capital, executed in Petersberg (Königswinter) on 30 September 1992, have agreed on the following provisions, which form part of the Convention:
(1) The Contracting States declare that:
This Convention shall not prejudice the respective taxation systems of the Contracting States, in particular the Bolivian taxation system based on source and the German taxation system based on residence and worldwide income.
(2) Ad Article 7:
- (a) In the Contracting State in which the permanent establishment is situated, no profits shall be attributed to a construction, installation or assembly project except those which arise from such activities themselves. Profits arising as a result of the supply of goods, whether related to such activities or realized independently of them, by the main permanent establishment or by another permanent establishment of the enterprise, or by a third person, shall not be attributed to the construction, installation or assembly project;
- (b) Income arising as a result of planning, design, construction or research work or technical services carried out in a Contracting State by a resident of that State in connection with a permanent establishment maintained in the other Contracting State shall not be attributed to that establishment.
(3) Ad Article 7:
Taxes levied on profits transferred from a Bolivian permanent establishment belonging to an enterprise of the Federal Republic of Germany shall not exceed 15 per cent.
(4) Ad Articles 10 and 11:
Notwithstanding the provisions of these Articles, the profits referred to therein that arise in the Federal Republic of Germany, shall be taxed as provided under the laws of that State, if they are:
- (a) Based on rights or debt-claims participating in profits, including the income a sleeping partner derives from his investment, or from loans participating in profits, or bonds or other similar holdings participating in profits, within the meaning of the taxation laws of the Federal Republic of Germany, and
- (b) Deductible in the computation of the payer's profits.
(5) Ad Article 11:
It is understood that the commission paid by a resident of the Republic of Bolivia to a bank or other credit institution in relation to services provided by the bank or credit institution shall be regarded as interest in accordance with Article 11, paragraph (3).
(6) Ad Articles 10, 11 and 12 and paragraph (3) of this Protocol:
If the rates under the respective national law are lower than the rates determined in the Convention, the lower rates under national law shall be applied.
(7) Ad Article 23:
Where a company which is a resident of the Federal Republic of Germany distributes dividends arising from income derived from sources in the Republic of Bolivia, Article 23 shall not preclude the levying of a compensatory tax in accordance with the taxation law of the Federal Republic of Germany.
(8) Ad Article 23:
Notwithstanding the provisions of Article 23, paragraph (1)(a), of the Convention, sub-paragraph (b) of that Article, with the exception of the additional provisions of sub-paragraph (c), shall apply mutatis mutandis to the profits of a permanent establishment and to property constituting the working capital of a permanent establishment; to dividends paid by a company and to the holding of shares in a company; or to the profits referred to in Article 13, paragraphs (1) and (2), of the Convention, provided that the resident of the Federal Republic of Germany demonstrates that the income of the permanent establishment or of the company originates exclusively or almost exclusively:
- (a) In one of the following activities carried out in the Republic of Bolivia: the production or sale of goods or merchandise, the extraction of natural resources, agricultural activities, technical counseling or the rendering of technical services, or banking or insurance operations; or
- (b) In dividends paid by one or more companies resident in the Republic of Bolivia, where more than 25 per cent of the capital is owned by the first-mentioned company, which also derives its income exclusively or almost exclusively from one of the following activities carried out in the Republic of Bolivia: the production or sale of merchandise or goods, the extraction of natural resources, agricultural activities, technical counseling, the rendering of technical services, or banking or insurance operations.