The Protocol amending the double taxation agreement (DTA) between Switzerland and Latvia in the area of taxes on income and wealth entered into force on 3 September 2018. It shall take effect from 1 January 2019.
The Protocol of Amendment implements in particular certain developments from the OECD project "Base erosion and profit shifting" (BEPS). In particular, it introduces an abuse clause based on the main purpose of a design or business. This clause corresponds in its basic features to the abuse clauses that Switzerland has agreed to in most of its double taxation agreements in recent years.
In addition, the residual tax of currently 5% on dividends paid to companies from participations of at least 10% of capital will be abolished. The residual tax on royalties of currently 10% has been reduced to 5%. The royalties paid by companies to other companies are now taxed only in the country of residence of the beneficial owner.
Finally, the agreement is supplemented by an arbitration clause that provides greater legal certainty for taxpayers.
Cf. also our contribution of 18 March 2018 and the press release of the FDF of 2 October 2018.
