Latvia signed a protocol with Switzerland to amend their tax treaty on 2 November 2016. The Protocol updates the 2002 treaty to introduce an administrative assistance clause allowing information to be exchanged between the two countries on request, and to add an anti-abuse clause in line with the wording of the OECD’s base erosion and profit shifting recommendations in this area.
The maximum withholding taxes will be as follows:
- 15% on dividends generally, but 0% if the company receiving the dividends owns at directly least 10% of the capital of the company paying the dividends, or if the recipient is a pension fund or the national bank of the other contracting state.
- 10% on interest generally, but 0% on interest paid by a company to a company (not being a partnership) of the other contracting state which is the beneficial owner of the interest. Furthermore, the rate is 0% for interest paid to pension funds and interest on bank loans.
- 5% on royalties generally, but 0% on royalties paid by a company to a company (not being a partnership) of the other contracting state which is the beneficial owner of the royalties.