7. pants

With reference to Article 23

a) Where a company being a resident of the Federal Republic

of Germany distributes income derived from sources within the

Republic of Latvia paragraph 1 shall not preclude the

compensatory imposition of corporation tax on such

distributions in accordance with the provisions of German tax

law.

b) The Federal Republic of Germany shall avoid double

taxation by a tax credit as provided for in paragraph 1 b) of

Article 23, and not by a tax exemption under paragraph 1 a) of

Article 23,

aa) if in the Contracting States income is placed under

differing provisions of the Agreement or attributed to

different persons - other than under Article 9 (Associated

Enterprises) - and this conflict cannot be settled by a

procedure pursuant to Article 25 and

i) if as a result of such placement or attribution the

relevant income would be subject to double taxation; or

ii) if as a result of such placement or attribution the

relevant income would remain untaxed or be subject only to

inappropriately reduced taxation in the Republic of Latvia and

would (but for the application of this paragraph) remain exempt

from tax in the Federal Republic of Germany; or

bb) if the Federal Republic of Germany has, after due

consultation and subject to the limitations of its internal

law, notified the Republic of Latvia through diplomatic

channels of other items of income to which it intends to apply

this paragraph in order to prevent the exemption of income from

taxation in both Contracting States or other arrangements for

the improper use of the Agreement.

In the case of a notification under sub-paragraph bb) the

Republic of Latvia may, subject to notification through

diplomatic channels, characterise such income under the

Agreement consistently with the characterisation of that income

by the Federal Republic of Germany. A notification made under

this paragraph shall have effect only from the first day of the

calendar year following the year in which it was transmitted

and any legal prerequisites under the domestic law of the

notifying State for giving it effect have been fulfilled.