The Double Taxation Relief (Taxes on Income) (Lithuania) Order 2001

• Citation: S.I. 2001/3925
• Sections: 16

Section 1

This Order may be cited as the Double Taxation Relief (Taxes on Income) (Lithuania) Order 2001.

Section 2

It is hereby declared—

(a) that the arrangements specified in the Convention set out in Part I of the Schedule to this Order and in the Exchange of Notes constituting an Agreement set out in Part II of that Schedule have been made with the Government of the Republic of Lithuania with a view to affording relief from double taxation in relation to income tax, corporation tax or capital gains tax and taxes of a similar character imposed by the laws of Lithuania;

(b) that those arrangements include provisions with respect to the exchange of information necessary for carrying out the domestic laws of the United Kingdom and the laws of Lithuania concerning taxes covered by the arrangements including, in particular, provisions about the prevention of fiscal evasion with respect to those taxes; and

(c) that it is expedient that those arrangements should have effect.

Section 1 Article 2(3)(a)

The United Kingdom takes note of the fact that the existing taxes as listed in the Convention are subject to a substantial programme of reform and wherever it is not possible to agree that a particular new tax satisfies the conditions of paragraph (4) of this Article the United Kingdom is ready to negotiate an amending Protocol to the Convention without delay.

Section 1 Article 2(3)(a)

The United Kingdom takes note of the fact that the existing taxes as listed in the Convention are subject to a substantial programme of reform and wherever it is not possible to agree that a particular new tax satisfies the conditions of paragraph (4) of this Article the United Kingdom is ready to negotiate an amending Protocol to the Convention without delay.

Section 2 Article 4(3)

Where a person other than an individual is a resident of both Contracting States and the competent authorities of the Contracting States endeavour to determine its status by mutual agreement, they shall have regard to such factors as the place of effective management, the place where it is incorporated or otherwise constituted and any other relevant factors.

Section 2 Article 4(3)

Where a person other than an individual is a resident of both Contracting States and the competent authorities of the Contracting States endeavour to determine its status by mutual agreement, they shall have regard to such factors as the place of effective management, the place where it is incorporated or otherwise constituted and any other relevant factors.

Section 3 Article 5(6)

The Contracting States agree that:

(i) the second sentence of paragraph (6) shall not apply unless conditions have been made or imposed between the agent and the enterprise in their commercial or financial relations which differ from those which would have been made or imposed had the activities of the agent not been devoted wholly or almost wholly on behalf of the enterprise; and

(ii) in considering whether the activities are devoted wholly or almost wholly on behalf of that enterprise, the Contracting States shall have regard to any relevant factors during any 12 month period commencing or ending in the fiscal year concerned. In particular, if the relevant activities are devoted wholly or almost wholly on behalf of that enterprise for a period exceeding 9 months within that period of 12 months, they will be considered to have been so devoted in that fiscal year.

Section 3 Article 5(6)

The Contracting States agree that:

(i) the second sentence of paragraph (6) shall not apply unless conditions have been made or imposed between the agent and the enterprise in their commercial or financial relations which differ from those which would have been made or imposed had the activities of the agent not been devoted wholly or almost wholly on behalf of the enterprise; and

(ii) in considering whether the activities are devoted wholly or almost wholly on behalf of that enterprise, the Contracting States shall have regard to any relevant factors during any 12 month period commencing or ending in the fiscal year concerned. In particular, if the relevant activities are devoted wholly or almost wholly on behalf of that enterprise for a period exceeding 9 months within that period of 12 months, they will be considered to have been so devoted in that fiscal year.

Section 4 Article 6(3)

The Contracting States understand that all income and gains arising from the alienation of immovable property in a Contracting State may be taxed in that Contracting State in accordance with Article 13 of this Convention.

Section 4 Article 6(3)

The Contracting States understand that all income and gains arising from the alienation of immovable property in a Contracting State may be taxed in that Contracting State in accordance with Article 13 of this Convention.

Section 5 Article 7(3)

In determining the profits of a permanent establishment, it is understood that expenses to be allowed as deductions by a Contracting State include only expenses that are deductible under the domestic laws of that State.

Section 5 Article 7(3)

In determining the profits of a permanent establishment, it is understood that expenses to be allowed as deductions by a Contracting State include only expenses that are deductible under the domestic laws of that State.

Section 6 Article 12

The Contracting States agree that where Lithuania agrees to a lower rate of tax than 5 per cent. in respect of the royalties specified in paragraph (2)(a) of Article 12 or 10 per cent. in respect of any other royalties in any Convention between Lithuania and a third State which is a member of the Organisation for Economic Co-operation and Development at the date of signature of this Convention, and that Convention enters into force either before or after the date of entry into force of this Convention, the competent authority of Lithuania shall notify the competent authority of the United Kingdom of the terms of the relevant paragraph in the Convention with that third State immediately after the entry into force of that Convention and such lower rate of tax shall be substituted in Article 12 of this Convention for 5 per cent. in respect of the royalties specified in paragraph (2)(a) or 10 per cent. in respect of any other royalties with effect from the date of entry into force of that Convention, or of this Convention, whichever is the later.

Section 6 Article 12

The Contracting States agree that where Lithuania agrees to a lower rate of tax than 5 per cent. in respect of the royalties specified in paragraph (2)(a) of Article 12 or 10 per cent. in respect of any other royalties in any Convention between Lithuania and a third State which is a member of the Organisation for Economic Co-operation and Development at the date of signature of this Convention, and that Convention enters into force either before or after the date of entry into force of this Convention, the competent authority of Lithuania shall notify the competent authority of the United Kingdom of the terms of the relevant paragraph in the Convention with that third State immediately after the entry into force of that Convention and such lower rate of tax shall be substituted in Article 12 of this Convention for 5 per cent. in respect of the royalties specified in paragraph (2)(a) or 10 per cent. in respect of any other royalties with effect from the date of entry into force of that Convention, or of this Convention, whichever is the later.

Section 7 Article 25(2)

It is understood that incentives to promote foreign investment shall not include incentives promoting only domestic investment.

If the foregoing proposals are acceptable to the Government of the Republic of Lithuania, I have the honour to suggest that the present Note and Your Excellency’s reply to that effect should be regarded as constituting an agreement between the two Governments in this matter, which shall enter into force at the same time as the entry into force of the Convention.

I take this opportunity to renew to Your Excellency the assurance of my highest consideration.

Section 7 Article 25(2)

It is understood that incentives to promote foreign investment shall not include incentives promoting only domestic investment.

If the foregoing proposals are acceptable to the Government of the Republic of Lithuania, I have the honour to suggest that the present Note and Your Excellency’s reply to that effect should be regarded as constituting an agreement between the two Governments in this matter, which shall enter into force at the same time as the entry into force of the Convention.