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PROTOCOL

PROTOCOL TO THE CONVENTION BETWEEN THE REPUBLIC OF LATVIA AND THE SLOVAK REPUBLIC FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL

At the signing of the Convention between the Republic of Latvia and the Slovak Republic for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital (hereinafter referred to as "the Convention"), the undersigned have agreed upon the following provisions which shall form an integral part of the Convention.

(I) With reference to Article 6 and Article 13:

It is understood that all income and gains from the alienation of immovable property referred to in Article 6 and situated in a Contracting State may be taxed in accordance with the provisions of Article 13.

(II) With reference to paragraph (3) of Article 7:

It is understood that the expenses to be allowed as deductions by a Contracting State shall include only those deductible expenses directly relating to the business of the permanent establishment.

(III) The Contracting States agree that notwithstanding the provisions of Articles 4 to 20 of the Convention in relation to offshore activities the following provisions shall apply:

(1) The term "offshore activities" means activities carried on offshore in a Contracting State in connection with the exploration or exploitation of the sea bed and sub-soil and their natural resources situated in that State.

(2) A person who is a resident of a Contracting State and carries on offshore activities in the other Contracting State shall, subject to paragraph (3), be deemed to be carrying on business in that other State through a permanent establishment or a fixed base situated therein.

(3) The provisions of paragraph (2) shall not apply where the offshore activities are carried on for a period or periods not exceeding in the aggregate 30 days in any twelve month period. For the purposes of this paragraph:

  • (a) offshore activities carried on by a person who is associated with another person shall be deemed to be carried on by the other person if the activities in question are substantially the same as those carried on by the first-mentioned person, except to the extent that those activities are carried on at the same time as its own activities;
  • (b) a person shall be deemed to be associated with another person if one is controlled directly or indirectly by the other, or both are controlled directly or indirectly by a third person or third persons.

(4) Salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment connected with offshore activities in the other Contracting State may, to the extent that the duties are performed offshore in that other State, be taxed in that other State. However, such remuneration shall be taxable only in the first-mentioned State if the employment is carried on for an employer who is not a resident of the other State and for a period or periods not exceeding in the aggregate 30 days in any twelve month period.

(5) Gains derived by a resident of a Contracting State from the alienation of:

  • (a) exploration or exploitation rights; or
  • (b) property situated in the other Contracting State which is used in connection with the offshore activities carried on in that other State; or
  • (c) shares deriving their value or the greater part of their value directly or indirectly from such rights or such property or from such rights and such property taken together; may be taxed in that other State.

In this paragraph the term "exploration or exploitation rights" means rights to assets to be produced by offshore activities carried on in the other Contracting State, or to interests in or to the benefit of such assets.

IN WITNESS WHEREOF, the undersigned, being duly authorised thereto, have signed this Protocol.

DONE in duplicate at Bratislava this eleventh day of March 1999, in the Latvian, Slovak and English languages, all three texts being equally authentic. In the case of divergence of interpretation the English text shall prevail.

FOR THE REPUBLIC OF LATVIA:

VALDIS BIRKAVS

FOR THE SLOVAK REPUBLIC:

EDUARD KUKAN