Withholding Tax Rates Compared in Denmark and Latvia
|Section 1: Withholding tax in Denmark||4|
|Paragraph 1: Danish withholding tax||4|
|Paragraph 2: General information about Danish withholding taxes||5|
|B.||Royalty payments and Interest||6|
|Section 2: The Withholding tax in Latvia||8|
|Paragraph 1: Latvian tax system||9|
|Paragraph 2: Latvian withholding taxes||9|
|Paragraph 3: General information about the Latvian withholding taxes||10|
|B.||Royalty payments and Interest||11|
|C.||Other types of withholding tax||11|
To conclude, Denmark and Latvia have the same withholding tax types, however the
percentage rate is different. For instance, in Denmark, the dividends can be liable to 27% of tax rate, when in Latvia the dividends are taxed by 0%, with exception of low-tax countries, where the tax rate is 15%. Furthermore, the interest and royalties is can see the similarities in taxation in these two States. In Denmark the interest is not liable of withholding tax, and just in some cases the tax rate
is 25%. However, the royalties tax paid to a non-resident are liable to 25% withholding tax, unless the EU Interest and Royalties Directive apply. Comparing with Latvia the interests are taxed by 0% tax rate and the Royalties tax rate is from 15% to 40%. However, Latvia withholding tax rate
in the low-tax countries for interest is 5%, and all other interests and royalties are taxed by 15% rate.
The significant difference may be seen between Latvia and Denmark is that in Latvia the withholding tax applies also to management and consulting fees, rental payments and disposal of real estate. These taxes can be seen as protectionist measures in order to not let explore the Latvian properties by foreigners. However, the tax rates are low therefore it is not real obstacle for investors to do business there.
This term paper consists of basic comparative analyze of two European tax country systems.
Between these two countries exists significant difference in tax rate percentages and the applicable
rules on withholding tax types. The research paper helped me to understand the importance of taxation treaties and EU Directives, because it is complicated to achieve harmonization if the tax systems are different. The taxation policy is really sensitive for the sovereignty of the states. Each States tries to keep their unique taxation system, therefore the unique harmonization is hardly to achieve. The Double tax treaties help the States to cooperate in these matters, and help to improve the business and relationships between the countries. Moreover, the Double tax treaties permits to
reduce the taxation rates in order to promote doing business in foreign States.…
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