7. Article

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.