The Saeima has adopted and the President promulgated the following laws: For the Government of the Republic of Latvia and Serbia and Montenegro in the Council of Ministers, of the Convention on the Elimination of double taxation with respect to taxes on income and capital article 1. 2005 November 22 in Belgrade signed in Latvia and the Government of the Republic of Serbia and Montenegro in the Council of Ministers, the Convention on the Elimination of double taxation with respect to taxes on income and on capital (hereinafter referred to as the Convention) with this law is accepted and approved. 2. article. The Convention shall enter into force on the 29th for the period specified in article and in order, and the Ministry of Foreign Affairs shall notify the newspaper "journal". 3. article. The law shall enter into force on the day following its promulgation. To put the Convention by law Latvian and English. The Parliament adopted the law of 16 March 2006. State v. President Vaira Vīķe-Freiberga in Riga on 31 March 2006, the Government of the Republic of Latvia and Serbia and Montenegro in the Council of Ministers, the Convention on the Elimination of double taxation with respect to taxes on income and on capital the Government of the Republic of Latvia and Serbia and Montenegro to the Council of Ministers, reaffirming willingness to conclude a Convention for the avoidance of double taxation with respect to taxes on income and capital, agree: article 1 persons covered this Convention shall apply to persons Convention that is one or both of the Contracting State party to the country resident. Article 2 taxes covered by the Convention (1) this Convention shall apply to taxes on income and capital, charged by the Contracting State or of its political or administrative unit of local government in good regardless of the method of collecting the tax. 2. On the income and capital taxes, regarded all the taxes, which puts the total income total capital or income or capital, and tax, which taxed movable or immovable property alienation in earned income and capital appreciation, and the tax that taxed the companies paid wages or pay the total amount. 3. The existing taxes to which this Convention applies, in particular, is: 1): (1) corporate income tax; (2) the individual income tax; (3) the real estate tax; (hereinafter-the Latvian tax); 2) Serbia and Montenegro: (1) the profit tax (porez na dobi); (2) income tax (porez na dohodak); (3) the capital tax (porez na imovin); (hereinafter-the duties of Serbia and Montenegro). 4. the Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Convention to supplement or replace the existing taxes. Both the competent authorities of the Contracting States inform each other of any significant amendments to the national tax legislation. Article 3 General definitions 1. If it is not apparent from the context, otherwise in this Convention: 1) the term "Contracting State" and "the other Contracting State" mean, depending on context or Latvia, Serbia and Montenegro; 2) the term "Latvia" means the Republic of Latvia, and, used in a geographical sense, it represents the territory of the Republic of Latvia and any other Latvian territorial waters adjacent to the territories in which, in accordance with the laws of Latvia and international law are implemented in Latvia of rights on land and sea depths and natural resources contained therein; 3) the term ' Serbia and Montenegro ' means the State Union of Serbia and Montenegro, and, used in a geographical sense, it means the Serbia and Montenegro's land territory, internal waters, territorial sea and air space, as well as land and sea depths in sea areas beyond the territorial sea, in respect of which Serbia and Montenegro in accordance with their domestic laws and international law, the sovereign right to implement with regard to marine and subsoils and there existing natural resource exploration and exploitation; 4) the term ' political and administrative units ' State of Serbia and Montenegro in the Union means Member; 5) the term "person" means a natural person, company, or any other Association of persons; 6) the term "company" means any person, association or corporate or any entity which, for the purposes of taxation is considered a corporate Association of persons; 7) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise run by a resident of a Contracting State and the company, run by a resident of the other Contracting State; 8) the term "international traffic" means any carriage by sea or air, by a company of a Contracting State, except when the sea or air transport to move only in the other Contracting State; 9) the term "competent authority" means: (1) Latvia – the Ministry of finance or its authorised representative; (2) Serbia and Montenegro-Ministry of external economic relations, or its authorised representative; 10) the term "national" means: (1) any natural person who has the nationality of a Contracting State; (2) any legal person, partnership or association whose status stems from a Contracting State applicable regulatory enactments. 2. for the application of this Convention, a Contracting State will use any term which is not defined here, if not apparent from the context, otherwise only in the sense in which it is applied to these laws of a Contracting State concerning the taxes to which this Convention applies, in addition, any explanation of the term in accordance with applicable tax laws and regulations will have precedence over this explanation of the term under other laws of that State. Article 4 resident 1. In this Convention, the term "resident of a Contracting State" means any person who, under the laws of this State is subject to taxation on the basis of the place of residence, residence, location management, place of incorporation (registration) or under any other criteria like this, and also includes that State, its political-administrative unit or municipality. However, this term does not include those individuals in this country is taxable only in relation to their income from this country to the existing sources of profits or capital located there. 2. Where, in accordance with the provisions of part 1 the natural person is a resident of both Contracting States, its status will be determined as follows: 1) this person will be considered a resident only of the State in which it has its habitual residence; If you are habitually resident in two countries, this person will be considered only for residents of the State, with which it has closer personal and economic relations (Centre of vital interests); 2) if it is not possible to determine the country in which that person is a vibrant centre of interests, or if it is not a permanent residence in one of the two countries, that person will be considered only for residents of the State that it is customary in the home; 3) if that person normally home in both countries or none of them, it will be considered only for residents of the country, of which this person; 4) if that person is a national of both States or no citizen of this country, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3. Where, in accordance with the provisions of part 1, a person other than a natural person, is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavour to resolve the matter by mutual agreement, taking into account the actual management of the person's location, or any other relevant factor. In the absence of such agreement, the application of this Convention, that person will not be entitled to claim any relief granted in accordance with this Convention. Article 5 permanent establishment 1. In this Convention, the term "permanent establishment" means a fixed place of business of which is wholly or partly carried on business. 2. The term "permanent establishment" includes: 1) control location; 2) branch; 3) Office; 4) factory; 5) workshop; and 6) mine shaft, oil or gas extraction sites, quarries or any other place of extraction of natural resources. 3. The term "permanent establishment" also includes: 1) construction site, construction or installation project if these work or the project is going on for more than nine months; 2) Contracting State the actions associated with the State of the sea and Earth Science natural resource exploration or mining, if such activities exceeds the period or periods in the aggregate 30 days in any twelve-month period. 4. Notwithstanding the provisions of the preceding subparagraph, the term "permanent establishment" does not include: 1) building and the use of equipment and only the goods belonging to, or for the storage of the products demonstrated or supplies; 2) belonging to the company goods or items of products intended solely for storage, demonstration or delivery; 3) belonging to the company goods or items of products intended for processing are solely in the other company. 4) permanent site for business purposes only and only for purchase of the goods or products or information gathering; 5) continued activities designed exclusively for business in any other good preparatory or ancillary activities; 6) permanent site designed solely to deal with 1) to 5) the actions referred to in points in any combination, if the total activity is preparatory or auxiliary character. 5. Notwithstanding paragraph 1 and 2 of the regulations, if a person who is not referred to in part 6 status of independent agent, running your business, and it is empowered to enter into contracts on behalf of the company, and the State typically used these powers, then it is considered that this company used permanent representation in that Contracting State in respect of any of the person's business activities, except where that person is carrying out activities referred to in part 4 of that is, a permanent place of business cannot be regarded as permanent representations in accordance with the provisions of part 4. 6. it will be considered that the company does not have permanent representation in the Contracting State where the undertaking is established in that country, only through brokers, sales agent or any other agent of an independent status, provided that such persons perform their normal business activities. 7. the fact that the company is a resident of a Contracting State-controlled company is a resident of the other Contracting State, or which carries on business in that other State through a permanent establishment or in any other way, or is subject to the control of such undertaking itself does not turn into one of those companies on the other company's permanent representation. Article 6 Income from real property 1. income which a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State, may be taxing in that other country. 2. The term "immovable property" have the meaning it has its laws and regulations of a Contracting State in which the property concerned is located. In any case, this term covers property which belongs to real estate property, livestock and equipment used in agriculture and forestry, rights to which the land property law general rules, any purchase of real property rights of use or similar right to acquire real estate, real estate usage rights and rights to variable or fixed payments as consideration for the mineral deposits, natural ore and other natural resources, or the right to use , the right to property, which may be caused by a marine and Earth Science natural resource exploration and exploitation, including the right to participation in the ownership or profit, you can get this property. Sea and air vehicles will not be regarded as immovable property. 3. the provisions of part 1 shall be applied in respect of income from real estate direct use, letting or use in any other way. 4. If the company's shares or other corporate rights give the holder the right to public use of the property, the income from the direct use, letting or use in any other way may impose taxes to the Contracting State in which the immovable property is situated. 5.1, 3, and part 4 of the rules will be applied also with regard to the income from immovable property of the company, as well as income from real property used for independent individual services. Article 7 business profits 1. Contracting State company profits will be taxed only in that State unless the enterprise carries on business in the other Contracting State through a permanent representation of the existing there. If the enterprise carries on business in that way, the company's profits can be taxing in the other country, but only the profit that can be attributed to the permanent establishment. 2. in accordance with the provisions of part 3, if the Contracting State is established in the other Contracting State through a permanent establishment there, existing in each Contracting State to the permanent representations should the amount of profit, it would benefit if the individual is clearly the company that performs the same or similar business activities under the same or similar conditions and acts completely independently of the undertaking, which uses the permanent representations. 3. in determining the profits of a permanent representation in that Contracting State, will be allowed to deduct the expenses incurred for the purposes of the standing representative offices located in the country or elsewhere, including operational and general administrative costs. However, the provisions of this part do not allow to deduct the expenses that would not be deductible if the permanent establishment were a separate enterprise. 4. where a Contracting State the profits attributable to the permanent establishment shall be determined by dividing the company's total profit in proportion between its divisions, part 2 does not prohibit Contracting State as usual after this principle to determine the profit for tax purposes; However, the method of distribution must be such that the result matches the principles contained in this article. 5. On the permanent representation will not be applied the earnings just because it has purchased the goods or products for the company, which is the permanent representation. 6. for the purposes of applying the provisions of the preceding paragraph, the profits attributed to the permanent representations, each year is determined by the same method, except if there is sufficient reason to do otherwise. 7. If the profit is included in the other articles of this Convention see income separately, this article shall not affect the other provisions of this article.  Article 8 international traffic 1. Contracting State company profits from the sea or air transport use in international traffic will be taxed only in the country. 2. the provisions of part 1 shall also apply to profits from the participation in a pool, joint business or international traffic transport agency.  Article 9 Associated enterprises 1. If: 1) Contracting State Enterprise directly or indirectly participating in the other Contracting State, the company's management or control or it owns part of the company's capital; or 2) one and the same person, directly or indirectly, participate in Contracting State and the other Contracting State, the company's management or control or they own part of the company's capital, and in any of these cases, these two companies in commercial or financial relations or established by rules different from those provisions that the force between two independent enterprises, then any profits What would one of the companies, but the above provisions do not affect the Oscars can be included in the profits of this company, and it may be appropriate to impose taxes. 2. where a Contracting State includes in the profits of an enterprise of that State and taxes accordingly profits on it, in respect of which no other country in the other Contracting State, the company has been taxed, and this included the profit is the profit that would have been the first company of a Contracting State, if the relationship between the two companies would have been as exist between two independent companies, the other country can make the appropriate adjustments for the size of the tax What are the gains of the other country. In determining this adjustment, take into consideration other provisions of this Convention and, if necessary, the competent authorities of the Contracting States for consultations. Article 10 dividends 1-dividends, a company of a Contracting State a resident of the other Contracting State paid to a resident, can be taxing in that other country. 2. However, such dividends may also be taxing under the national laws of the Contracting State of which the resident is a company that pays dividends, but if this true owner of dividends is resident of the other Contracting State, the tax shall not exceed: 1) 5 per cent of the total amount of dividends, if real owner of dividends is a company (other than a partnership) that are at least 25 percent of the company capital that paid dividends; 2 10 per cent of the dividend) total in all other cases. This part does not affect the taxation of the company in respect of the profits out of which the dividend is paid. 3. The term "dividends" in this article means income from shares or other rights to participate in profits, not claims, as well as income, which in accordance with the laws of the country in which the resident is a company that performs the distribution of profits, subject to the same taxation treatment as income from shares. 4. parts 1 and 2 shall not apply if the true owner of dividends, which is a resident of a Contracting State, carries on business in the other Contracting State of which the resident is a company that paid dividends, with the existing permanent representation there, or give independent individual services in that other State through a permanent base located there, and where participation, which is paid out in dividends is actually associated with the permanent representation of or permanent basis. In this case, depending on the circumstances, apply article 7 or 14. 5. If company-a resident of a Contracting State derives profits or income in the other Contracting State, that other State may not impose any taxes or these companies paid dividends, except where the dividends are paid to a resident of the other State, or if the participation of which is paid out in dividends, is actually related to the permanent representation or permanent base in another country; nor does it impose a duty of retained earnings retained earnings of the company, even if the dividends paid or retained earnings consists in whole or in part from the other country of profit or income. Article 11 interest 1. interest arising in a Contracting State and paid to a resident of the other Contracting State, may be taxing in that other country. 2. However, such interest may also be taxing in accordance with national laws or regulations of the Contracting State in which they arise, but, if the interest owner is implemented on the territory of the other Contracting State, a resident of the tax must not exceed 10 percent of the total amount of interest. 3. Notwithstanding the provisions of part 2, interest arising in a Contracting State, the implementation of which owner is the other Contracting Government, including its political and administrative units and local governments, the central bank or any financial institution wholly owned by the Government, the first in the country will be exempt from taxation. 4. for the purposes of this article, the term "interest" means income from debt claims of every kind, whether or not secured by mortgage and whether or not they have the right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes, which belong to these securities, bonds or debentures. The term "interest" does not include income that is treated as a dividend under the provisions of article 10. Interest received on payments made during, not be regarded as interest for the application of the provisions of this article. 5. parts 1 and 2 shall not be applied, if the interest owner, which is implemented by the Contracting State resident, doing business in the other Contracting State in which the interest arises, through a permanent representation of the existing there, or give independent individual services in that other State through a permanent base located therein, and of claims on the basis of which the interest is paid is effectively connected with such permanent establishment or fixed base. In this case, depending on the circumstances, apply article 7 or 14. 6. If the payer of the interest is a resident of a Contracting State, it will be deemed that the interest generated in this country. If, however, the person paying the interest, whether that person is a resident of a Contracting State or not, used in the Contracting State of the existing permanent representation or permanent base located there, which incurred debt obligations, for which you pay interest, and this interest is paid (bear) permanent establishment or fixed base, will be considered that the interest incurred in the State in which the permanent establishment or fixed base. 7. If, on the basis of the special relationship between the payer and the interest percentage implemented owner or between both of them and some other person, the amount of interest that relate to debt claims, for which it is paid, exceeds the amount that would have been able to agree to the interest payer and the interest owner will, if implemented, they would not have this special relationship, then the provisions of this article shall be applied only to the last-mentioned amount. In this case, the payment of the part which exceeds this amount, taxes are levied according to each Contracting State laws and regulations, taking into consideration other provisions of this Convention. Article 12 Royalties (1) Royalties arising in a Contracting State and paid to a resident of the other Contracting State, may be taxed in that other State taxes. 2. However, such royalties may also impose taxes also according to national laws or regulations of the Contracting State in which it arises, but if the true owner of the royalties is a resident of the other Contracting State, the tax shall not exceed: 1) 5 per cent of the total royalties of this article 3 of part 1) royalties referred to; 2) 10 per cent of the total royalties of 3 parts of this article 2) royalties referred to; 3. The term "royalties" in this article means payments of any kind received as compensation 1) for any copyright or for the right to use any copyright on literary, artistic or scientific work, including cinematograph films and films or recordings, or other image or sound reproduction means the radio or television broadcasting, any patent and 2), trade marks, design or model, plan, secret formula or process, or for the use of rights of use or for production, commercial, or scientific equipment, or for the right to use them, or for information concerning industrial, commercial or scientific experience. 4. parts 1 and 2 shall not be applied, if the true owner of the royalties, which is a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent representation of the existing there, or give independent individual services in that other State through a permanent base located there, and if the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In this case, depending on the circumstances, apply article 7 or 14. 5. If the payer of the royalties is a resident of a Contracting State, it will be considered that the royalties arise in the country. If, however, the person paying the royalties, whether or not that person is a resident of a Contracting State or not, used in the Contracting State of the existing permanent representation or permanent base located there, which is actually related to the right or property in respect of which the royalties are paid, and if the payment of the royalties (bear) the Permanent Mission or permanent base, will be deemed to arise in the State in royalties in which the permanent establishment or fixed base. 6. If, on the basis of the special relationship between the payer of royalties and royalties shall implement the owner or between both of them and some other person, the amount of the royalties relating to the use, right or information for which it is paid, exceeds the amount of royalties that would have been able to implement a single payer and the owner if they would not have this special relationship, then the provisions of this article shall be applied only to the last-mentioned amount. In this case, the portion of the payment that exceeds this amount, you will be taxed according to each Contracting State laws and regulations, taking into consideration other provisions of this Convention. Article 13 capital gains 1. income or capital gains which a resident of a Contracting State derives, the disposal referred to in article 6, in the other Contracting State the existing real property, may be subject to taxes in the other country. 2. Capital gains that accrued, disposing of property, which is part of the company of a Contracting State to the permanent representation in business property in the other Contracting State, or disposing of property that belongs to a resident of a Contracting State a permanent base in the other Contracting State, which created the independent personal services, including capital gains from such permanent missions (alone or with the whole enterprise) or of such a permanent disposal base disposal can impose taxes in the other Contracting State. 3. Capital gains by the public company, which uses the sea or air means of transport in international traffic, shall forfeit the use in international traffic, marine or air transport or disposal of the property, which belongs to the use of such vehicles shall be taxable only in that State. 4. Capital gains, by a resident of a Contracting State derives disposes of shares, directly or indirectly, more than 50 percent of the values obtained from the real property situated in the other Contracting State may be taxed in that other State taxes. 5. Capital gains that accrued, disposes of any property which is different from 1, 2, 3 and 4, part estate, will be subject to tax only in the Contracting State of which the resident is the seizure of property. Article 14 independent personal services 1. resident of a Contracting State – physical person's income from a professional or other independent activities are taxable only in that State. However, such income may be subject to tax in the other Contracting State if: 1) this individual their own operational needs using it regular access to permanent base in the other Contracting State but only to the extent that the income is attributable to this permanent base; or 2) this natural person resident in the other Contracting State for a period or periods exceeding in the aggregate 183 that days in any twelve month period commencing or ending in the taxation year, but only part of the income gained by the person in the other Contracting State of the transactions. 2. The term "professional activity" includes independent scientific, literary, artistic, educational or teaching activities as well as doctors, lawyers, engineers, architects, dentists and accountants of independent operation. Article 15 dependent personal services 1.16, 18, 19 and 21 of the regulations, the payment of wages and other remuneration, similar to that of a resident of a Contracting State receives for paid employment, be taxable only in that State unless the paid work is not performed in the other Contracting State. If the salaried work is performed in the other Contracting State, the remuneration received for it can impose taxes in the other country. 2. Notwithstanding the provisions of part 1 the consideration that a resident of a Contracting State receives for paid work that is performed in the other Contracting State, be taxable only in the first mentioned State, if: 1) a beneficiary has been second in the country for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the taxation year; and 2 remuneration paid) an employer who is not a resident of the other State, or the name of the employer; and 3) not paid (not cover) permanent representation or permanent base that the employer uses the second in the country. 3. Notwithstanding the previous paragraph of this article, the rules of remuneration received for paid work that is being done to a company of a Contracting State in international traffic used for sea or air transport, tax may be imposed in the country. Article 16 Directors ' fees directors ' fees and other similar payments made by a resident of a Contracting State receives as a member of the Board of Directors in the company, which is the second resident of the Contracting State may be taxed in that other State taxes. Article 17 artists and athletes 1. articles 14 and 15 of the regulations to the income of a resident of a Contracting State as izpildītājmāksliniek, as theatre, film, radio or television artist, musician, or as an athlete on their individual activities in the other Contracting State may be taxed in that other State taxes. 2. If izpildītājmāksliniek or athlete's income on his individual activity in the area in question is paid rather than izpildītājmāksliniek or athlete himself but to another person, to the following income regardless of the 7, 14 and 15 the provisions of article 1 may be subject to taxes in the Contracting State in which the activity or sports izpildītājmāksliniek. 3. Apart from 1 and 2, the provisions of part of a resident of a Contracting State from income on individual izpildītājmāksliniek or athlete's activity will be taxable only in that State, if such activities are performed in the other Contracting State of both countries approved for cultural or sports Exchange program. Article 18 pensions 1. in accordance with article 19 of part 2 of the regulations for pensions and other similar remuneration, by a resident of a Contracting State receives for previous paid employment, be taxable only in that State. 2. Notwithstanding the provisions of part 1 and part 2 article 19 rules, pensions and other similar remuneration, which is paid in accordance with the national social security system, tax will be levied only in that country. Article 19 government service 1.1) salary, wages and other similar remuneration, other than a pension, and a natural person the cost of Contracting State or of its political or administrative unit of local government for this country, unit, or for the services provided to the municipality will be taxable only in that State. 2) However, such salaries, pay for, and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that State who: (1) is a citizen of that country; or (2) did not become a resident of that State solely to provide these services. 2.1), any pension that is paid to the natural person contracting State or of its political or administrative unit of local government, or who is paid from the funds set up for services provided by that person in that State, unit, or the municipality will be taxable only in that State. 2) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of that other State and the citizen. 3.15, 16, 17, and article 18 shall apply to salaries, wages, other remuneration and pensions similar to that paid for services provided in respect of the Contracting State, its political and administrative units or authorities of the business. Article 20 students payments which a residence, study or internship needs receives a student, apprentice or trainee who is, or immediately before the arrival of the State was the territory of the other Contracting State and who was the first resident in that country have come only for the purpose of study or internship, this country will not be taxed if such payments are from sources that are not in the country. Article 21 professors and researchers 1. Natural persons who come to the State to teach or deal with research at the University, College, school or other recognised education in this country, and who is, or was immediately before the arrival of the other Contracting State, a resident of income that accrued on this training or research, will be exempt from taxation in the first country within a period not exceeding two years from the date of When that person for the purposes of this first came to this country. The exemption shall apply on condition that the revenue is from sources that are not in the first State and is subject to taxation in the other Contracting State. 2. the provisions of part 1 does not apply to income from research if such research is undertaken not in the public interest, but mostly of a specific person or persons personal gain. Article 22 other income 1. Other previous articles of this Convention for the Contracting State not specified income of residents, regardless of their sources will be taxable only in that State. 2. the provisions of part 1 does not apply to income, other than income from article 6 defined in part 2 of the real property, if the income beneficiary who is a resident of a Contracting State, carries on business in the other Contracting State through a permanent representation of the existing there, or give independent personal services in the other State through a permanent base located there, and if the rights or property of which you receive this income is actually related to the permanent representations, or permanent base. In this case, depending on the circumstances of this Convention article 7 or 14. Article 23 capital 1. Capital represented in article 6 that a resident of a Contracting State of the real estate, which is situated in the other Contracting State may be taxed in that other State taxes. 2. Capital represented by movable property forming part of the estate which the Contracting State the company's permanent representation used in business, or capital represented by movable property that belongs to a resident of a Contracting State a permanent base in the other Contracting State, which is used for independent personal services, may be taxed in that other State taxes. 3. Capital represented by sea and air vehicles that the company of a Contracting State in international traffic are used, as well as movable property belonging to the maritime or air transport means will be taxable only in that State. 4. all other Contracting State, a resident of the capital items will be taxable only in that State. Article 24 avoidance of double taxation 1. In Latvia, double taxation shall be avoided as follows: Where a resident of Latvia 1) derives income or owns capital which it in accordance with this Convention may impose taxes in Serbia and Montenegro, then, unless the domestic law of Latvia is more favourable provisions, Latvia permit: (1) reduce the resident's income tax on the amount that is equal to Serbia and Montenegro the paid income tax; (2) reduce the resident's capital tax on amount equal to Serbia and Montenegro the paid capital duty. These reductions, however, in no case, exceed the income tax or capital tax, part of which is calculated in Latvia before the application of this reduction and, depending on the circumstances of which is attributable to the income or the capital which may be taxed taxes in Serbia and Montenegro. 2) in order to apply this part 1) point if the company-resident of Latvia receives a dividend from a company-a resident of Serbia and Montenegro, in which it owns at least 10 percent of shares with full voting rights, then Serbia and Montenegro be included in tax paid not only for the tax paid on dividends, but also the appropriate portion of the tax paid on the profits of the company out of which the dividend was paid. 2. Serbia and Montenegro double taxation will be avoided as follows: 1) If residents of Serbia and Montenegro in terms of income or capital, which belongs to it in accordance with this Convention may impose taxes in Latvia, then Serbia and Montenegro permit: (1) reduce the resident's income tax for an amount equal to the income tax paid in Latvia; (2) reduce the resident's capital tax on amount equal to the capital tax paid in Latvia. These reductions, however, in no case, exceed the income tax or capital tax, part of which is calculated in Serbia and Montenegro and of the application of this reduction depending on the circumstances, which is attributable to the income or the capital which may impose tax in Latvia. 2) where in accordance with any provision of the Convention a resident of Serbia and Montenegro gained income or capital owned in Serbia and Montenegro are exempt from taxation, then the calculation of the tax on the residents remaining income or capital of Serbia and Montenegro may take into account the exempted from taxation of income or capital. 25. Article 1 of the prevention of discrimination on the nationals of a Contracting State in the other Contracting State shall not be subject to taxation or related requirements that are more burdensome than the taxation or the related requirements which, in the same circumstances, in particular with respect to residence, applies or may apply to the nationals of the other. This provision shall, notwithstanding the provisions of article 1, also apply to persons who are not party to one or both of the Contracting States of the residents. 2. stateless persons – residents of a Contracting State in one of the Contracting States shall not be subject to taxation or related requirements that are more burdensome than the taxation or the related requirements which, in the same circumstances, in particular with respect to residence, applies or may apply to citizens of the country concerned. 3. Taxation the company of a Contracting State to the permanent representation the other Contracting State may not be less favourable than those of other taxation public companies which perform the same operation. This provision should not be interpreted that it imposes on the Contracting State the obligation to grant the other Contracting State any personal relief to residents, discount and reduction in relation to taxation, which this country give its residents, in the light of their civil status or family responsibilities. 4. Except where the applicable part 1 of article 9, article 11 part 7 or article 12 part 6 rules, interest, royalties and other payments made by the enterprise of a Contracting State in the other Contracting State the cost of the resident, in determining the taxable profit of the company is to report by the same rules as if they are paid to a resident of the first mentioned State. Similarly, the enterprise of a Contracting State in the other Contracting State debt residents, establishing this company's taxable capital, is to be deducted by the same rules as if they would apply to the first residents of that State. 5. the Contracting State whose capital, in whole or in part, directly or indirectly, belongs to one or more residents of the other Contracting State or in full or in part, directly or indirectly control these residents, the first State may not be subject to any taxation or any requirements associated with it, which is different from the taxation and related requirements, which are or may be exposed to similar to the former State enterprises or which is more burdensome for them. 6. This article shall apply to the taxes referred to in article 2. Article 26 mutual conciliation procedure 1. If a person believes that one or both of the Contracting State party to a national action in relation to this person causes or will cause the taxation which does not comply with the provisions of this Convention, that person may, irrespective of the country's domestic legislation that remedies to submit complaints to the competent authority of the country of which the person is resident, or if the complaint relates to article 24, part 1 -the competent authority of the country of which are this person. The complaint shall be submitted for review within three years of the first notification of the action which led to the provisions of this Convention do not appropriate taxation. 2. If the competent authority deems the complaint to be justified and even fail to reach a satisfactory solution, it will endeavour to agree with the other competent authority of a Contracting State to this Convention shall not prevent the adequate taxation. Any such agreement is reached is due irrespective of the Contracting State of the domestic laws and the established time limits. 3. the national competent authorities should seek mutual agreement resolve any difficulties or eliminate doubts which may arise out of the interpretation or application of this Convention. They may also consult to avoid double taxation in cases not provided for in the Convention. 4. in order to reach agreement on these issues in the preceding subparagraph, the competent authorities of the Contracting States may communicate directly with one another, as well as following an exchange of views can take place with the competent authorities of the Contracting States of the representatives of the Commission. Article 27 Exchange of information 1. The competent authorities of the Contracting States shall exchange the information necessary for the carrying out of the provisions of this Convention or of the domestic laws and requirements for the taxes covered by this Convention, in so far as these regulations do not conflict with the provisions of this Convention, in particular, to prevent fraud or abuse of the evasion of the tax evasion. 1 and 2, of the Convention article does not limit the exchange of information. Any information received by a Contracting State, should be considered as sensitive as information that is obtained in accordance with the laws of this State, and may be disclosed only to persons or authorities (including courts and administrative authorities) involved in the tax to which this Convention applies, in the calculation of the collection, the use of coercive measures, trials or appeals related to these taxes. Such persons or authorities, this information must be used only for the purposes mentioned above. They may disclose the information in public hearings or in judgements. 2. the provisions of part 1 should not be explained so that they bind the Contracting State the obligation: 1) take administrative measures, which do not comply with one or other of the contracting national legislation and administrative practice; 2) to provide information that is not available under one or the other national legislation or administrative practice generally applicable; 3) to provide information that can reveal any trade, business, industrial, commercial or professional secret or process technology, or to provide information, the disclosure of which would be contrary to the public interest (ordre public). Article 28 diplomatic and consular personnel, nothing in this Convention shall affect the diplomatic missions or consular posts personnel fiscal privileges granted to it by the General rules of international law or a special agreement. Article 29 entry into force 1. Contracting States shall inform diplomatic channels each other that the constitutional requirements have been met necessary for the Convention to enter into force. 2. this Convention shall enter into force by 1. referred to in the last statement date, and its provisions shall apply: 1): (1) in respect of taxes withheld at the time cost, income that accrued in January of the calendar year or after the first day of the calendar year following the year in which this Convention enters into force; (2) in respect of other taxes on income and capital taxes, the taxes payable in any tax year, which begins in January of the calendar year or after the first day of the calendar year following the year in which this Convention enters into force; 2) Serbia and Montenegro: in respect of taxes on income earned and taxes on capital, which belongs in any tax year, which begins in January of the calendar year or after the first day of the calendar year following the year in which this Convention enters into force. Article 30 termination this Convention shall remain valid as long as the one Contracting State it shall be terminated. Each Contracting State may terminate this Convention, through diplomatic channels, submit notice of termination at least six months before any end of the calendar year. In this case the Convention shall cease: 1): (1) in respect of taxes withheld at the time, the cost to the revenue gained from January of the calendar year or after the first day of the calendar year following the year in which the notice of termination has been received; (2) in respect of other taxes on income and capital taxes, the taxes payable in any tax year, which begins in January of the calendar year or after the first day of the calendar year following the year in which the notice of termination has been received; 2) Serbia and Montenegro: in respect of taxes on income earned and taxes on capital, which belongs in any tax year, which begins in January of the calendar year or after the first day of the calendar year following the year in which the notice of termination has been received. In witness thereof, the undersigned, being duly authorised, have signed this Convention. The Convention is drawn up in two copies in Belgrade 2005. November 22, Latvian, Serbian and English, in addition, all texts being equally authentic. Different case is decisive for the interpretation of the text in English.
Government of the Republic of Latvia Artis Pabriks in Serbia and Montenegro to the Council of Ministers, Vuk Draškovič CONVENTION BETWEEN the Government OF the REPUBLIC OF Latvia AND the COUNCIL OF MINISTER OF Serbia AND Montenegro FOR the avoidance OF double TAXATION WITH RESPECT TO taxes ON income AND ON CAPITAL Minister of Serbia and Montenegro, to conclud a Convention (menu Rngton Line4) for the avoidance of double taxation with respect to taxes on income and on capital , Have agreed as follows: article 1 PERSONS COVERED this Convention shall apply to persons who are residents of one or both of the Contracting States. Article 2 taxes COVERED 1. This Convention shall apply to taxes on income imposed on behalf of the Andean capital on (a) the Contracting State or of its political subdivisions or local authorities, irrespectiv of the manner in which they are levied. 2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovabl property, taxes on the total wage or non of salar to paid by enterprises as well as taxes on capital appreciation. 3. The existing taxes to which the Convention shall apply are in particular: 1) in Latvia: (1) the enterprise income tax (corporate income tax); (2) the personal income tax (individual income tax); (3) the immovabl property tax (estate tax); (hereinafter referred to as "Latvian tax"); 2) in Serbia and Montenegro: (1) the tax on profit (porez na dobi); (2) the tax on income (porez na dohodak); (3) the tax on capital (porez na imovin); (hereinafter referred to as "the Serbia and Montenegro tax"). 4. The Convention shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify the other of any each significant changes that have been made in their taxation laws. Article 3 GENERAL DEFINITION 1. For the purpose of this Convention, unless the context otherwise requires: 1) the terms "a Contracting State" and "the other Contracting State" mean Latvia or Serbia and Montenegro, as the context requires; 2) the term "United States" means the Republic of Latvia and, when used in the sense of location, means the territory of the Republic of Latvia and any other area adjacent to the territorial waters of the Republic of Latvia within which under the law of Latvia and in accordanc with international law, the rights of Latvia may be exercised with respect to the sea bed and its sub soil and their-natural resources; 3) the term ' Serbia and Montenegro ' means the State of Serbia and Montenegro and the community when used in a sense it means location the land territory of Serbia and Montenegro, its internal sea waters and the belt of the territorial sea, the air space there, as well as over the seabed and sub-soil of the part of the high seas outside the outer limit of the territorial sea over which Serbia and Montenegro exercises its sovereign rights for the purpose of exploration and exploitation of their natural resources in accordanc with its internal legislation and international law; 4) the term "political subdivision", in the State of Serbia and Montenegro, community means Member States; 5 the term "person") includes an individual, a company and any other body of persons; 6) the term "company" means any body corporate or any entity that is treated as a body corporate for tax purpose; 7) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; 8) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State; 9) the term "competent authority" means: (1) in Latvia, the Ministry of finance or its authorised representative; (2) in Serbia and Montenegro, the Ministry for International Economic relations or its authorised representative; 10) the term "national" means: (1) any individual possessing the nationality of a Contracting State; (2) any legal person, partnership or association deriving its status as such from the law in force in a Contracting State. 2. As regards the application of the Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purpose of the taxes to which the Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State. Article 4 resident 1. For the purpose of this Convention, the term "resident of a Contracting State" means any person who, under the law of that State, is liabl to tax therein by reason of his domicile, residence, place of management, place of incorporation or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liabl to tax in that State in respect only of income from sources in that State or capital situated therein. 2. Where by reason of the provision of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows: a he shall be deemed to 1) be a resident only of the State in which he has a permanent home available to him; If he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (Centre of vital interests); 2) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode; 3) if he has an habitual abode in both States or in ither of them, he shall be deemed to be a resident only of the State of which he is a national; 4) if he is a national of both States or of ither of them not, the competent authorities of the Contracting States shall settle the the question by mutual agreement. 3. Where by reason of the provision of paragraph 1 a person other than an individual is a resident of both Contracting States, then the competent authorities of the Contracting States shall endeavour to the their resolve the case by mutual agreement due regards being had to its place of effective management or any other criterion of their relevant. In the absence of such an agreement, such a person shall not be entitled to claim any benefits under this Convention. Article 5 permanent establishment 1. For the purpose of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 2. The term "permanent establishment" includes especially: a a place of management 1); 2) a branch; 3) an Office; 4) a factory; 5) (a) and 6) workshop, a mine, an oil or gas well, a quarry or any other place of extraction of natural resources. 3. The term "permanent establishment" of likewis: 1) encompass (a) a building site or construction or installation project only if such site or project lasts more than nine months; 2) activities carried on in a Contracting State in connection with the exploration or exploitation of the sea bed and its sub soil and their-natural resources situated in that State, if such activities are carried on for a period or periods exceeding in the aggregate 30 days in any twelve month period. 4. Notwithstanding the preceding provision of this article, the term "permanent establishment" shall be deemed not to include: 1) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise; 2) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery; 3) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; 4) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise; 5) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a features or auxiliary character; 6) the maintenance of a fixed place of business solely for any combination of activities mentioned in Sub-paragraph 1) 5), provided that the overall activity of the fixed place of business resulting from this combination is of a features or auxiliary character. 5. Notwithstanding the provision of paragraph 1 and 2, where a person-other than an agent of an independent status to whom paragraph 6 applies-is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclud-contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertak-for the enterprise , unless the activities of such person with limited it to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provision of that paragraph. 6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it to one business in the carr a State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. 7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carr to one business in that other State (whethers through a permanent establishment or otherwise), shall not of itself either company a permanent constitut establishment of the other. Article 6 income FROM IMMOVABL PROPERTY 1. Income derived by a resident of a Contracting State from immovabl property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State. 2. The term "immovabl property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovabl property, livestock and equipment used in agriculture and forestry, rights to which the provision of general law respecting landed property apply, any option or similar right to the immovabl property, usufruc acquir of immovabl property and rights to variable or fixed payments as considerations for the working of, or the right to work , mineral deposits, sources and other natural resources, rights to assets to be produced by the exploration or exploitation of the sea bed and sub-soil and their natural resources, including rights to interests in or to the benefit of such assets. Ships, boats and aircraft shall not be regarded as immovabl property. 3. The provision of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovabl property. 4. Where the ownership of shares or other corporate rights in a company the owner of entitl such shares or corporate rights to the enjoymen of immovabl property held by the company, the income from the direct use, letting, or use in any other form of such right to the enjoymen a may be taxed in the Contracting State in which the immovabl property is situated. 5. The provision of paragraphs 1, 3 and 4 shall also apply to the income from the immovabl property of an enterprise and to income from the immovabl property used for the performance of independent personal services. Article 7 business profits 1. The profits of an enterprise of a Contracting State shall be only in the taxabl that State unless the enterprise to one business in carr the other Contracting State through a permanent establishment situated therein. If the enterprise on business as aforesaid to carr, the profits of the enterprise may be taxed in the other State but only so much of them as is attributabl to that permanent establishment. 2. Subject to the provision of paragraph 3, where an enterprise of a Contracting State to one business in carr the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which It is a permanent establishment. 3. In determining the profits of a permanent establishment, there shall be allowed as a deduction in "of which the expense incurred for the purpose of the permanent establishment, including Executive and general administrative expense so incurred, whethers of in the State in which the permanent establishment is situated or elsewher. Nothing in this paragraph shall, however, a marbles for the authoris expense which would not be deductibl if the permanent establishment were a separate enterprise. 4. Insofar as it has been customary in a Contracting State to determin the profits to be attributed to a permanent establishment on the basis of an apportionmen of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclud that Contracting State from determining the profits to be taxed by such an apportionmen as may be customary; the method of apportionmen, however, the adopted shall be such that the result shall be in accordanc with the principles led in this article. 5. From the profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 6. For the purpose of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 7. Where profits include items of income which the deal with separately in other articles of this Convention, then the provision of those articles shall not be affected by the provision of this article. Article 8 INTERNATIONAL TRAFFIC 1. Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxabl only in that State. 2. The provision of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency. Article 9 ASSOCIATED enterprises where 1 1) an enterprise of a Contracting State of the directly or indirectly participat in the management, control or capital of an enterprise of the other Contracting State, or 2) the same person is directly or indirectly to participat in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State , and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly. 2. Where a Contracting State includes in the profits of an enterprise of that State-and taxes accordingly-profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises , then that other State may make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provision of this Convention and the competent authorities of the Contracting States shall if the cessary not consult each other. Article 10 DIVIDENDS 1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the law of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceeds 100:1) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 25 per cent of the capital of the company paying the dividend; 2) 10 per cent of the gross amount of the dividends in all other cases. This paragraph shall not be affec the taxation of the company in respect of the profits out of which the dividend is paid with. 3. The term "dividends" as used in this article means income from shares or other rights, not being debt-claims, participating in profits, as well as income which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident. 4. The provision of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carr to one business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or perform in that other State independent personal services from a fixed base situated therein , and the holding in respect of which the dividend is paid is effectively connected with such permanent establishment or with a fixed base. In such case the provision of article 7 or article 14, as the case may be, shall apply. 5. Where a company which is a resident of a Contracting State or of deriv profits income from the other Contracting State, that other State may not impost any tax on the dividends paid by the company, except insofar as such dividends to be paid to a resident of that other State or insofar as the holding in respect of which the dividend is paid is effectively connected with a permanent establishment or a fixed base situated in (a) that other State, nor subject the company's undistributed profits the to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits wholly or partly be consis of profits or income arising in such other State. Article 11 interest 1-interest arising in a Contracting. The State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such interest may also be taxed in the Contracting State in which it «arise and according to the law of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceeds 100 10 per cent of the gross amount of the interest. 3. Notwithstanding the provision of paragraph 2, interest shall be exempted from tax in the Contracting State in which it «arise if it is derived and beneficially-owned by the Government of the other Contracting State, including any political subdivision or local authority thereof, the Central Bank or any financial institution wholly owned by that Government. 4. The term "interest" as used in this article means income from debt-claims of every kind, whethers or not secured by mortgage and whethers or not carrying a right to participat in the debtor's profits, and in particular, income from government securities and income from bonds or debentur, including premium and prizes attaching to such securities, bonds or debentur. The term "interest" shall not include any income which is treated as a dividend under the provision of article 10. Penalty charges for late payment shall not be regarded as interest for the purpose of this article. 5. The provision of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carr to one business in the other Contracting State in which the interest «arise, through a permanent establishment situated therein, or perform in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provision of article 7 or article 14, as the case may be, shall apply. 6. Interest shall be deemed the «arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whethers he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtednes on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed the «arise in the State in which the permanent establishment or fixed base is situated. 7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds 100 for the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship , the provision of this article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain the taxabl according to the law of each Contracting State, due regard being had to the other provision of this Convention. Article 12 to 1 to ROYALT Royalt arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such may be taxed in royalt also in the Contracting State in which they «arise and according to the law of that State, but if the beneficial owner of the royalt to is a resident of the other Contracting State, the tax so charged shall not exceeds 100:1) 5 per cent of the gross amount of the royalt to within the meaning of the sub-paragraph 1) of paragraph 3 of this article; 2) 10 per cent of the gross amount of the royalt to within the meaning of the sub-paragraph 2) of paragraph 3 of this article. 3. The term "royalt" as used in this article means payments of any kind received as a considerations: 1) for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films and films or tapes and other means of image or sound reproduction for radio or television broadcasting, and 2) for the use of , or the right to use, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. 4. The provision of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalt, being a resident of a Contracting State, carr to one business in the other Contracting State in which the royalt «arise, through to a permanent establishment situated therein, or perform in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalt paid is effectively connected with such permanent establishment or with fixed base. In such case the provision of article 7 or article 14, as the case may be, shall apply. 5. you shall be deemed the Royalt «arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the whethers royalt, he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the incurred, and such was the royalt royalt with is borne by such permanent establishment or fixed base, then such shall be deemed to be the royalt «arise in the State in which the permanent establishment or fixed base is situated. 6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalt, having regard to the use, right or information for which they are paid, exceeds 100 for the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship , the provision of this article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain the taxabl according to the law of each Contracting State, due regard being had to the other provision of this Convention. Article 13 CAPITAL gains 1. Income or gains derived by a resident of a Contracting State from the alienation of property referred to immovabl in article 6 and situated in the other Contracting State may be taxed in that other State. 2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services , including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State. 3. Gains derived by an enterprise of a Contracting State operating ships or aircraft in international traffic from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be only in the taxabl you state. 4. Gains derived by a resident of a Contracting State from the alienation of shares deriving more than 50 per cent of their value directly or indirectly from immovabl property situated in the other Contracting State may be taxed in that other State. 5. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4, shall be taxabl only in the Contracting State of which the alienator is a resident. Article 14 independent PERSONAL services 1-income derived by an individual. who is a resident of a Contracting State in respect of professional services or other activities of an independent character shall be only in the taxabl you state, unless: 1) he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributabl to that fixed base may be taxed in that other Contracting State; or 2) the his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the in any twelve month period commencing or ending in the fiscal year concerned; in that case, only so much of the income as is derived from his activities performed in that other Contracting State may be taxed in that other State. 2. The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants. Article 15 dependent PERSONAL services 1-subject to the provision of articles 16, 18, 19 and 21, salar, WAGs and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxabl only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived there from may be taxed in that other State. 2. Notwithstanding the provision of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be the taxabl only in the first-mentioned State if: 1) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the in any twelve month period commencing or ending in the fiscal year concerned, and 2) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and 3) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State. 3. Notwithstanding the preceding provision of this article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State. Article 16 directors ' fees directors ' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of Directors of a company which is a resident of the other Contracting State may be taxed in that other State. Article 17 artistes AND SPORTSMEN 1. Notwithstanding the provision of articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsman's, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State. 2. Where income in respect of personal activities exercised by an entertainer or a sportsman's in his capacity as such notes to the accru entertainer or sportsman's himself but to another person, that income may, notwithstanding the provision of articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsman's are exercised. 3. Notwithstanding the provision of paragraph 1 and 2, income derived by a resident of a Contracting State from his personal activities as an entertainer or a sportsman's shall be only in the taxabl you state if the activities are exercised in the other Contracting State within the framework of a cultural or sports exchange programme approved by both Contracting States. Article 18 PENSION 1. Subject to the provision of paragraph 2 of article 19, and other similar remuneration paid pension to a resident of a Contracting State in considerations of past employment shall be only in the taxabl you state. 2. Notwithstanding the provision of paragraph 1 of this article and paragraph 2 of article 19, and other similar remuneration paid at pension under the social security system of a Contracting State shall be only in the taxabl you state. Article 19 government service 1.1), WAGs and others of the Salar similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be only in the taxabl you state. 2) However, such, WAGs and others of the salar similar remuneration shall only be taxabl in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who: (1) is a national of that State; or (2) did not become a resident of that State solely for the purpose of rendering the services. 2. a Any pension paid by, 1) or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be only in the taxabl you state. 2 However, such pension shall be) taxabl only in the other Contracting State if the individual is a resident of, and a national of, that State. 3. The provision of articles 15, 16, 17, and 18 shall apply to salar, and other similar remuneration, WAGs and their pension, in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof. Article 20 students payments which a student, an apprentice or a trainee who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receive for the purpose of his maintenance, education or training shall not be taxed in that State , provided that such payments «arise from sources outside that State. Article 21 PROFESSOR AND RESEARCHER. An individual who visits a Contracting State generally for the purpose of teaching or carrying out research at a university, College, school or other recognised educational institution in that State and who is or was immediately before that visit a resident of the other Contracting State, shall be the main from taxation in the first-mentioned Contracting State on remuneration for such teaching or research for a period not exceeding two years from the date of his first visit for that purpose , provided that such remuneration «arise from sources outside that State and is subject to tax in the other Contracting State. 2. The provision of paragraph 1 of this article shall not apply to income from research if the research is undertaken not in the public interest but primarily for the private benefit of a specific person or persons. Article 22 OTHER income 1-items of income. of a resident of a Contracting State, wherever arising, not deal with in the foregoing articles of this Convention shall be only in the taxabl you state. 2. The provision of paragraph 1 shall not apply to income, other than income from property immovabl as defined in paragraph 2 of article 6, if the recipient of such income, being a resident of a Contracting State, carr to one business in the other Contracting State through a permanent establishment situated therein, or perform in that other State independent personal services from a fixed base situated therein , and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provision of article 7 or article 14, as the case may be, shall apply. Article 23 CAPITAL 1. Capital represented by immovabl property referred to in article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State. 2. Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or by movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, may be taxed in that other State. 3. Capital represented by ships and aircraft operated in international traffic by an enterprise of a Contracting State and by movable property pertaining to the operation of such ships and aircraft, shall be only in the taxabl you state. 4. All other elements of capital of a resident of a Contracting State shall be only in the taxabl you state. Article 24 ELIMINATION OF double TAXATION 1. In Latvia, double taxation shall be eliminated as follows: where a resident of) Corporation's deriv income or own capital which, in accordanc with this Convention, may be taxed in Serbia and Montenegro, unless a more favourabl treatment is provided in its domestic law, Latvia shall allow: (1) as a marbles from the tax on the income of that resident, an amount equal to the income tax paid thereon in Serbia and Montenegro; (2) as a marbles from the tax on the capital of that resident, an amount equal to the capital tax paid thereon in Serbia and Montenegro. Such marbles in either case shall not, however, that about 12 of the income tax or capital tax in Latvia, as computed before the deduction in "is given, which is attributabl, as the case may be, to the income or the capital which may be taxed in Serbia and Montenegro. 2) For the purpose of sub-paragraph 1) where a company that is a resident of Latvia receive a dividend from a company that is a resident of Serbia and Montenegro in which it will own at least 10 per cent of its shares having full voting rights, the tax paid in the Serbia and Montenegro shall include not only the tax paid on the dividend , but also the appropriate portions of the tax paid on the underlying profits of the company out of which the dividend was paid. 2. In Serbia and Montenegro shall be eliminated the double taxation as follows: 1) where a resident of Serbia and Montenegro's income or own deriv capital which, in accordanc with the provision of this Convention, may be taxed in the United Kingdom, Serbia and Montenegro shall allow: (1) as a marbles from the tax on the income of that resident, an amount equal to the income tax paid in Latvia; (2) as a marbles from the tax on the capital of that resident, an amount equal to the capital tax paid in Latvia. Such marbles in either case shall not, however, that about 12 of the income tax or capital tax, as computed before the deduction in "is given, which is attributabl, as the case may be, to the income or the capital which may be taxed in the United Kingdom. 2) where in accordanc with any provision of the Convention income derived or capital owned by a resident of Serbia and Montenegro is main from tax in Serbia and Montenegro, Serbia and Montenegro may not vertheles, in calculating the amount of tax on the remaining income or capital of such resident, take into account the exempted income or capital. Article 25 NON-DISCRIMINATION 1-nationals of a Contracting. State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensom than the taxation and connected requirements to which nationals of that other State in the same, in particular with circumstanc respect their residence, may be subjected to or. This provision shall, notwithstanding the provision of article 1, also apply to persons who are not residents of one or both of the Contracting States. 2. a person who with Stateles of residents of a Contracting State shall not be subjected in either Contracting State to any taxation or any requirement connected therewith, which is other or more burdensom than the taxation and connected requirements to which nationals of the State concerned in the same, in particular with circumstanc respect their residence, may be subjected to or. 3. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of the of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowance, relief and reduction for taxation purpose on account of civil status or family responsibilities which it grants to its own residents. 4. Except where the provision of paragraph 1 of article 9, paragraph 7 of article 11, or paragraph 6 of article 12, apply, interest, and other disbursement royalt paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxabl profits of such enterprise, be-deductibl under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debt of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the capital of the taxabl such enterprise, be-deductibl under the same conditions as if they had been contracted to a resident of the first-mentioned State. 5. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensom than the taxation and connected requirements to which other similar enterprises of the first-mentioned State may be subjected to or. 6. The provision of this article shall apply to the taxes referred to in article 2 article 26 MUTUAL agreement procedure 1-where a person consider. that the actions of one or both of the Contracting States result or will result for him in taxation not in accordanc with the provision of this Convention, he may, irrespectiv of the remedies provided by the domestic law of those States , present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of article 25, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordanc with the provision of the Convention. 2. The competent authority shall endeavour, if the objection to it appear to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordanc with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States. 3. The competent authorities of the Contracting States shall endeavour to the their resolve by mutual agreement any doubt arising as to the difficult or is it the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention. 4. The competent authorities of the Contracting States the may communicate with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs. Article 27 Exchange OF INFORMATION 1. The competent authorities of the Contracting the States shall exchange such information as is not cessary for carrying out the provision of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention, insofar as the taxation there under is not contrary to the Convention, in particular for the prevention of fraud or evasion of such taxes. The exchange of information is not restricted by article 1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of , or the determination of appeal in relations to, the taxes covered by the Convention. Such persons or authorities shall use the information only for such purpose. They may be published by the information in disclos court proceedings or in judicial decisions. 2. In no case shall the provision of of paragraph 1 be construed so as to impost on a Contracting State the obligation: a to carry out 1) administrative measure's at variance with the laws and administrative practice of that or of the other Contracting State; 2 to supply information which is not) obtainabl is under the laws or in the normal course of the administration of that or of the other Contracting State; 3) supply information which would disclos any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public). Article 28 members OF DIPLOMATIC missions AND CONSULAR posts Nothing in this Convention shall be affec the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provision of special agreements. Article 29 ENTRY into force 1. The Contracting States shall notify each other, through diplomatic channels, when the constitutional requirements for the entry into force of this Convention have been complied with. 2. The Convention shall enter into force on the date of the later of the notifications referred to in paragraph 1 and its provision shall have in effect: 1) in Latvia: (1) in respect of taxes withheld at source, on income derived on or after the first day of January in the calendar year next following the year in which the Convention enter into force; (2) in respect of other taxes on income and taxes on capital, for taxes for any fiscal year beginning chargeabl on or after the first day of January in the calendar year next following the year in which the Convention enter into force; 2) in Serbia and Montenegro: in respect of the tax on the income derived and the tax on capital owned in each fiscal year beginning on or after the first day of January in the calendar year next following the year in which the Convention enter into force. Article 30 TERMINATION this Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year. In such event, the Convention shall cease to the have effect: 1) in Latvia: (1) in respect of taxes withheld at source, on income derived on or after the first day of January in the calendar year next following the year in which the notice has been given; (2) in respect of other taxes on income and taxes on capital, for taxes for any fiscal year beginning chargeabl on or after the first day of January in the calendar year next following the year in which the notice has been given; 2) in Serbia and Montenegro: in respect of the tax on the income derived and the tax on capital owned in each fiscal year beginning on or after the first day of January in the calendar year next following the year in which the notice of termination has been given. In witness whereof, the undersigned, duly authorised the theret, have signed this Convention. Done at Belgrade this 22 day of November 2005, in two originals, in the Latvian, Serbian and English languages, all texts being equally authentic. In case of any divergenc of interpretation, the English text shall prevails.   For the Government of the Republic of Latvia Artis Pabriks For the Council of Minister of Serbia Vuk Draskovic and Montenegro