I. Ad Articles 1 and 4
It is understood that for the purposes of this Convention a Contracting State, its political subdivisions or local authorities thereof, an instrumentality of that State, political subdivision or authority as well as a pension fund or charitable organisation recognized as such in a Contracting State and of which the income is generally exempt from tax in that State, shall be regarded as resident of that State. As recognized pension fund shall be regarded, in the case of Latvia, any pension fund established under the laws of Latvia and in the case of the Netherlands, any pension fund recognized and controlled according to statutory provisions.
II. Ad Article 3
It is understood that the terms "the Netherlands" or "Latvia", as the case may be, shall include the exclusive economic zone within which the Netherlands or Latvia may exercise sovereign rights in accordance with their domestic law and international law, if the Netherlands or Latvia under their law have designated or will designate such a zone and exercises or will exercise taxation rights therein.
III. Ad Article 4
An individual living aboard a ship without any real domicile in either of the Contracting States shall be deemed to be a resident of the Contracting State in which the ship has its home harbour.
IV. Ad Articles 5, 6, 7, 13 and 25
It is understood that exploration and exploitation rights relating to natural resources shall be regarded as immovable property situated in the Contracting State the sea bed and sub-soil of which they are related to, and that these rights shall be deemed to pertain to the property of a permanent establishment in that State. Furthermore, it is understood that the aforementioned rights include rights to interests in, or to the benefits of, property to be produced by such exploration or exploitation.
V. Ad Articles 6 and 13
It is understood that for the purposes of Articles 6 and 13 options or similar rights in respect of immovable property are regarded as immovable property.
VI. Ad Article 7
In respect of paragraphs 1 and 2 of Article 7, where an enterprise of a Contracting State sells goods or merchandise or carries on business in the other Contracting State through a permanent establishment situated therein, the profits of that permanent establishment shall not be determined on the basis of the total amount received by the enterprise, but shall be determined only on the basis of that portion of the profits of the enterprise that is attributable to the actual activity of the permanent establishment in respect of such sales or business. Specifically, in the case of contracts for the survey, supply, installation or construction of industrial, commercial or scientific equipment or premises, or of public works, when the enterprise has a permanent establishment, the profits attributable to such permanent establishment shall not be determined on the basis of the total amount of the contract, but shall be determined only on the basis of that part of the contract that is effectively carried out by the permanent establishment in the Contracting State where the permanent establishment is situated. The profits related to that part of the contract which is carried out by the head office of the enterprise shall be taxable only in the Contracting State of which the enterprise is a resident.
VII. Ad Article 8
For the purposes of this Article, profits derived by an enterprise of a Contracting State from the operation in international traffic of ships and aircraft include profits derived by the enterprise from the rental on a bareboat basis of ships and aircraft if operated in international traffic as well as profits derived from the lease of containers if such rental or lease profits are supplementary or incidental to the profits described in paragraph 1.
VIII. Ad Articles 10, 11 and 12
Where tax has been levied at source in excess of the amount of tax chargeable under the provisions of Articles 10, 11 or 12, applications for the refund of the excess amount of tax have to be lodged with the competent authority of the State having levied the tax, within a period of three years after the end of the calendar year in which the tax has been levied.
IX. Ad Article 11
The provisions of sub-paragraph d) (ii) of paragraph 3 shall apply only for the first five years after this Convention takes effect. This period may be extended by mutual agreement between the competent authorities. The Contracting States shall notify each other of such agreement in writing through diplomatic channels.
X. Ad Articles 11 and 12
In case a Contracting State should introduce under its national law a withholding tax on interest or royalties, then, notwithstanding the provisions of paragraph 2 of Article 11 and of paragraph 2 of Article 12, during a period of five years after such introduction, no withholding tax shall be levied from interest or royalties, as the case may be, paid with respect to contracts concluded before the date of signature of this Convention.
XI. Ad Article 12
1 Payments received as a consideration for technical services, including studies or surveys of a scientific, geological or technical nature, or for engineering contracts including blueprints related thereto, or for consultancy or supervisory services shall be deemed not to be payments received as a consideration for information concerning industrial, commercial or scientific experience, except to the extent that the amounts of such payments are based on production, sales, performance, profits or any other similar basis related to the use of the said information.
2 It is understood that the term "royalties" shall be deemed not to include payments for the use of drilling rigs, or similar purpose equipment, used for the exploration for or the extraction of hydrocarbons.
If in any convention for the avoidance of double taxation concluded by Latvia with a third State, being a member of the Organisation for Economic Co-operation and Development (OECD) at the date of signature of this Convention, Latvia after that date would agree to exclude any kind of rights or property from the definition contained in paragraph 4 or exempt royalties arising in Latvia from Latvian tax on royalties or to limit the rates of tax provided in paragraph 2, such definition or exemption or lower rate shall automatically apply as if it had been specified in paragraph 4 or paragraph 2, respectively.
XII. Ad Article 16
It is understood that "bestuurder or commissaris" of a Netherlands company means persons, who are nominated as such by the general meeting of shareholders or by any other competent body of such company and are charged with the general management of the company and the supervision thereof, respectively.
XIII. Ad Article 24
It is understood that for the computation of the reduction mentioned in paragraph 3 of Article 24, the items of capital referred to in paragraph 1 of Article 23 shall be taken into account for the value thereof reduced by the value of the debts secured by mortgage on that capital and the items of capital referred to in paragraph 2 of Article 23 shall be taken into account for the value thereof reduced by the value of the debts pertaining to the permanent establishment or fixed base.
XIV. Ad Article 27, paragraph 5, and Articles 28 and 29
With respect to the provisions of arbitration, exchange of information and assistance in recovery, the competent authorities of the Contracting States may, by common agreement, prescribe rules concerning matters of procedure, forms of application and replies thereto, disposition of amounts collected, minimum amounts to collection and related matters.
IN WITNESS whereof the undersigned, duly authorized thereto, have signed this Protocol.
DONE at The Hague, this fourteenth day of March 1994, in duplicate, in the English language.
For the Government of the Kingdom of the Netherlands
(s.d.) R. R M. LUBBERS
(s.d.) P. H. KOOIJMANS
(s.d.) M. J. J. VAN AMELSVOORT
For the Government of the Republic of Latvia
(s.d.) VALDIS BIRKAVS