Mexico - Lithuania Tax Treaty

CONVENTION

BETWEEN THE GOVERNMENT OF THE REPUBLIC OF LITHUANIA AND THE GOVERNMENT OFTHE UNITED MEXICAN STATES

FOR THE AVOIDANCE 0F DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WIIH RESPECT TO TAXES 0N INCOME

The Government of the Republic of Lithuania and the Government of the United Mexican States,

Desiring to conclude a Convention for the avoidance of double taxation and the prevention of ﬁscal evasion with respect to taxes on income,

Have agreed as follows:

Article 1

Persons covered

This Convention sliail apply to persons who are residents of one or both of the

Contracting States.

Article 2

Taxes covered

This Convention shall apply to taxes on income imposed on behalf ofa

Contracting State. irrespective of the manner in which they are levied.

There shall be regarded as taxes on income all taxes imposed on total income or on elements of income: including taxes on gains from the alienation of

movable or immovable propeny.

The existing taxes to which the Convention shall apply are in particular: a) in Lithuania;

(i) the proﬁt tax;

(ii) the income tax;

(hereinafter referred to as "Lithuanian tax"); b) in Mexico:

(i) the federal income tax;

(ii) the business ﬂat rate tax;

(hereinaﬂer referred to as "Mexican tax").

The Convention shall apply also to any identical or substantially similar taxes that are imposed after the date ofsignature of the Convention in addition to, or in place of, the existing taxes The competent authorities of the Contracting States shall

notify each other of any signiﬁcant changes that have been made in their taxation laws.

Article 3

General deﬁnitions

For the purposes of this Convention, unless the context otherwise requires:

a) the term "Lithuania" means the Republic of Lithuania and, when used in

the geographical sense, means the territory under its sovereignty and

other areas over which the Republic of Lithuania exercises sovereign

rights jurisdiction in accordance with international law;

the term "Mexico" means the United Mexican States, when used in a

geographical sense it includes the territory of the United Mexican States,

as well as the integrated parts of the Federatiom the islands, including

the reefs and cays in the adjacent waters, the islands of Guadalupe and

Revillagigedo, the continental shelf and the seabed and sub-soil of the

islands, says and roofs, the waters of the territorial seas and the inland

waters and beyond them the areas over which, in accordance with the

international law, Mexico may exercise its sovereign rights of

exploration and exploitation of the natural resources of the seabed, sub—

soi! and the supra-jacent waters, and the air space of the national territory

to the extent and under conditions established by international law;

the terms "a Contracting State" and "the other Contracting State" mean

Lithuania 01' Mexico, as the context requires;

the term "person" includm an individual, a company and any other body

of persons;

the term "company" means any body corporate or any entity that is

treated as a body corporate for tax purposes;

the terms “enterprise of a Contracting State" and "enterprise of the other

Contracting State" mean respeetively an enterprise carried on by a

resident of a Contracting State and an enterprise carried on by a resident

of the other Contracting State;

the term "intemational trafﬁc" means any transpott by a ship or aircraft

operated by an enterprise of a Contracting State, except when the ship or

aircraft is operated solely between places in the other Contracting State;

the term "competent authority" means:

(i) in Lithuania the Minister of Finance or his authorised representative;

(ii) in Mexico, the Ministry of Finance and Public Credit;

the term "national" means:

(i) any individual possessing the nationality ofa Contracting State;

(ii) any legal person: partnership or association deriving its status as

such from the laws in force in a Contracting State.

As regards the application of the Convention at any time by a Contracting State, any teIm not deﬁned therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Convention applies, any meaning under the

applicable tax laws of that State prevailing over a meaning given to the term under

other laws of that State.

Article 4 Resident

For the purposes of this Convention, the term "resident of a Contracting

State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management,»place of incorporation or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only} of income from sources in that State or capital situated therein,

Where by reason of the provisions of paragraph 1 an individual is a

resident of both Contracting States, then his status shall be determined as follows:

a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his pemual and economic relations are closer (centre

of vital interests);

if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;

if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;

if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual

agreement.

Where by reason of the provisions of paragraph 1 a person other than an

individual is a resident of both Contracting States, the competent authorities of the

Contracting States shall by mutual agreement endeavour to settle the question and to

determine the mode of application of the Convention to such person In the absence of

such agreement, for the purposes of the Convention, the person shall not be entitled to

claim any beneﬁts provided by this Convention.

l .

Article 5

Permanent establishment

For the purposes of this Convention, the term "permanent establishment"

means a ﬁxed place of business through which the business of an enterprise is wholly

or partly carried on.

The term "permanent establishment" includes especially: a place ofmanagement;

a branch;

an ofﬁce:

a factory;

a workshop, and a mine, an oil or gas well, a quarry or any other place of extraction of

natural resources.

The term “permanent establishment” likewise encompasses:

a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than 6 (six) months; the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within a Contracting State for a period or periods exceeding in the aggregate 183 (one hundred

eighty three) days in any l2 (twelve) month period.

Notwithstanding the preceding provisions of this Article, the term

"permanent establishment" shall be deemed not to include:

the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

the maintenanceof a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

the maintenance of a ﬁxed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;

the maintenance of a ﬁxed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or

an xi hazy character;

t) the maintenance of a ﬁxed place of business solely for any combination of activities mentioned in sub-paragraphs a) to 6), provided that the overall activity of the ﬁxed place of business resulting from this

combination is 01‘ a preparatory or auxiliary character.

St Notwithstanding the provisions of paragraphs 1 and 2, where a person - other than an agent of an independent status to whom paragraph 6 applies — is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a ﬁxed place of business, would not make this ﬁxed place of business a permanent establishment under

the provisions of that paragraph.

An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that

such persons are acting in the ordinary course of their business.

The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries an business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent

establislunent of the other.

Article 6

Income from immovable property

1‘ Income derived by a resident of a Contracting State ﬁ‘om immovable property (including income fmm agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

The term “immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or ﬁxed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraﬁ shall not be regarded as immovable property.
The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of inunovable property, as well as income from the alienation of immovable property.
The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for

the performance of independent personal services.

Article 7

Business proﬁts

The proﬁts of an enterprise of a Contracting State shall be taxable only

in that State unless the enterprise carries on business in the other Contracting State

through a permanent establishment situated therein. If the enterprise carries on business

as aforesaid, the proﬁts of the enterptise may be taxed in the other State but only so much ofthern as is attributable to:

a) that permanent establishment;

b) sales in that other State of goods or merchandise of the same or similar kind as the goods or merchandise sold through that permanent establishment.

However, the proﬁts derived from the sales described in subparagraph 1:) may be

considered attributable to the permanent establishment only if it is proved that these sales are carried on for the purpose of obtaining beneﬁt under this Convention in that

State where the permanent establishment is located.

Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a pennanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the proﬁts which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with

the enterprise of which it is a permanent establishment.

In determining the proﬁts of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. Subject to the provisions of Article 25, the expenses to be allowed as deductions by a Contracting State shall include only expenses that are deductible under the domestic

laws 0f that State.

Insofar as it has been customary in a Contracting State to determine the proﬁts to be attributed to a permanent establishment on the basis of an apportionment of the total proﬁts of the enterprise to its various parts, nothing in paragaph 2 shall preclude that Contracting State from determining the proﬁts to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shalt be in accordance with the principles contained in

this Article.

No proﬁts shall be ath-ibuted to a permanent establishment by reason of the mere pumhase by that permanent establishment of goods or merchandise for the

enterprise.

For the purposes of the preceding paragraphs, the proﬁts to be attributed to the permanent establishment shall be determined by the same method year by year

unless there is good and sufﬁcient reason to the contrary 7. Where proﬁts include items of income which are dealt With separately in

other Articles of this Convention. then the provisions of those Articles shall not be

affected by the provisions of this Article. Article 8 Shipping and air transport

Proﬁts of an enterprise of a Contracting State from the operation ofships

or aircraft in intemational trafﬁc shall be taxable only in that State

Proﬁts referred to in paragraph 1 shall not include proﬁts harm the use of

any other mean transport.

For the purposes of this Article, proﬁts ﬁ'om the operation of ships or aireraﬁ in international trafﬁc include proﬁts from the use or rental of containers, including trailers, barges and related equipment for the transport of containers, where such use or rental is incidental to the operation of ships or aircraft in international traffic.
The provisions of paragraph 1 shall also apply to proﬁts ﬁom the

participation in a pool, a joint business or an international operating agency.

Article 9

Associated enterprises

I. Where a) an enterprise of a Contracting State participates directly or indirectly in the management1 control or capital of an enterprise of the other Contracting State, or b) the same persons participate directly or indirectly in the management, control or capital of an enleiprise ot' a Contracting State and an enterprise of the other Contracting State, and in either case conditions are made or imposed between the two enterprises in their commercial or ﬁnancial relations which differ from those which would be made between independent enterprises, then any proﬁts which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the proﬁts of that enterprise and taxed

accordingly.

Where a Contracting State includes in the proﬁts of an enterprise of that State » and taxes accordingly - proﬁts on which an enterprise of the other Contracting State has been charged to tax in that other State and the proﬁts so included are proﬁts which would have accrued to the enterprise of the ﬂrst—mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those proﬁts, if it considers this adjustment to be justiﬁed In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting

States shall if necessary consult each other.

Article 10 Dividends

t. Dividends paid by a company which is a resident of a Contracting State

to a resident of the other Contracting State may be taxed in that other State.

However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneﬁcial owner of the dividends is a resident of the other Contracting State. the tat so charged shall not exceed:

a) 0 per cent of the gross amount of the dividends if the beneﬁcial owner is

a company (other than a partnership) which holds directly at least 10 per cent of the capital of the company paying the dividends;

b) 15 per cent of the gross amount of the dividends in all other Cases.

This paragraph shall not affect the taxation of the company in respect of the

proﬁts out of which the dividends are paid.

3‘ The term "dividends” as used in this Article means income from shares or other rights, not being deht-claims, participating in proﬁts, as well as income from other rights which is subjected to the same taxation treatment as income from shares by

the laws of the State of which the company making the distribution is a resident.

The provisions of paragraphs 1 and 2 shall not apply if the beneﬁcial otmer of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a pennanent establishment situated therein, or performs in that other State independent personal services from a ﬁxed base situated therein, and the holding in respect of Which the dividends are paid is effectively connected with such permanent i establishment or ﬁxed base. In such case the provisions ofArticle 7 or Article 14, as the case may he shall apply.
Where a company which is a resident of a Contracting State derives proﬁts or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a ﬁxed base I situated in that other State, nor subject the company's undistributed proﬁts to a tax on the companyfs undistributed proﬁts, even if the dividends paid or the undistributed

proﬁts consist Wholly or partly of proﬁts or income arising in such other State.

Article 11

Interest
Interest arising in a Contracting State and paid to a resident of the other

Contracting State may be taxed in that other State.

However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneﬁcial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest

3, Notwithstanding the provisions of paragraph 2 interest arising in a Contracting State, derived and beneﬁcially onmed by the Government of the other Contracting State, including its political subdivisions and local authorities, the Central Bank, or any ﬁnancial institution wholly owned by that Government as may be agreed upon between the competent authorities of the Contracting States, shall be exempt from tax in the ﬁrst mentioned State.

The term "interest" as used in this Article means income from debt- claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s proﬁts, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures as well as all other income that is treated as income from money lent by the laws of the Contracting State in which the income arisesi The term "interest“ shall not include any income which is treated as a

dividend under the provisions of paragraph 3 of Article 10.

St The provisions of paragraphs 1, 2 and 3 shall not apply if the beneﬁcial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a ﬁxed base situated therein, and the debhclaim in resPect of which the interest is paid is effectively connected with such permanent establishment or ﬁxed base. In such case the

provisions of Article 7 or Article 14, as the case may he, shall apply.

Interest shalt be deemed to arise in a Contracting State when the payer is a resident of that State Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a ﬁxed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is home by such permanent establishment or ﬁxed base, then such interest shall be deemed to arise in the State in

which the permanent establishment or ﬁxed base is situated

Where, by reason of a specie! relationship between the payer and the beneﬁcial owner or between both of them and some other person, the amount of the interest, having regard to the deht-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneﬁcial ovmer in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to

the laws of each Contracting State, due regard being had to the other provisions of this

Convention. Article 12 Royalties 1t Royalties arising in a Contracting State and paid to a resident of the other

Contracting State may be taxed in that other State.

2, However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State. but if the beneﬁcial owner of

the royalties is a resident of the other Contracting State, the tax so charged shall not

exceed 10 per cent of the gross amount of the royalties.

3‘ The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientiﬁc work including cinematograph ﬁlms and ﬁlms or tapes and other means of image or sound reproduction for radio or television broad—easting, any patent, trade mark, design or model, plan, secret formula or process, or for transmission by satellite, cable, optic ﬁbre or similar technology, or for the use of, or the right to use, industriat, commercial or scientiﬁc equipment, or for information concerning industrial, commercial or scientiﬁc experience. Notwithstanding the provisions of Article 13, the term “royalties” also includes payments derived from the alienation of any such right or

property which are contingent on the productivity or use thereof.

4‘ The provisions of paragraphs 1 and 2 shall not apply if the beneﬁcial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or perfomis in that other State independent personal services from a ﬁxed base situated therein, and the tight or property in respect ofwhieh the royalties are paid is effectively connected with such permanent establishment or ﬁxed base. In such case the provisions ofAnicie 7 or Article 14, as the case may he, shall apply.

Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however: the person paying the royalties, whether he is a resident of a Contracting States or not, has in a Contracting State a permanent establishment or a ﬁxed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by suCh permanent establishment or ﬁxed base, then such royalties shall be deemed to arise in the State in which the permanent

establishment or ﬁxed base is situated

Where, by reason of a special relationship between the payer and the beneﬁcial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneﬁcial owner in the absence of such relationship, the provisions of this Article shall apply only to the last—rnent‘ioned amount. In such case, the excess pan of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the

other provisions of this Convention.

Article 13 Capital gains

1‘ Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State

may be taxed in that other State.

Gains derived by a resident of a Contracting State ﬁ-om alienation of shares deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other

State.

Gains derived by a resident of a Commuting State from the alienation of shares or other corporate rights, other than those mentioned in paragraph 2, in a company which is a resident of the other Contracting State may be taxed in that other State if the alienator, at any time during the l2 (twelve) month period preceding such alienation, had a participation, directlyor indirectly, ofat least 25 per cent of the capital of that company However, the ten; 50 charged shall not exceed 20 per cent of the

taxable gains.

Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a ﬁxed base available to a resident of 3 Connecting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of

such ﬁxed base, may be taxed in that other State.

Gains derived by an enterprise of a Contracting State operating ships or aircraﬂ in international trafﬁc from the alienation of ships or aircraft operated in international trafﬁc, or movable property pertaining to the operation of such ships or

aircraft, shall be taxable only in that State.

6‘ Gains from the alienation of any property other than that referred to in the preceding paragraphs of this Article, shall he taxable only in the Contracting State

of which the alienator is a resident

Article 14

Independent personal services

Income den'ved by an individual who is a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State unless he has a ﬁxed base regularly available to him in the other Contracting State for the ptupose of performing his activities. If he has such a ﬁxed base, the income may be tzoted in the other State but only so much of it as is attributable to that ﬁxed base. For this purpose, where an individual who is a resident of a Contracting State stays in the other Contracting State for a period or periods

exceeding in the aggregate 183 (one hundred eighty three) days in any [2 (twelve)

month period commencing or ending in the ﬁscal year concemed, he shall be deemed to

have a ﬁxed base regularly available to him in that other State and the income that is derived from his activities referred to above that are performed in that other State shall

be attributable to that ﬁxed base.

The term "professional services" includes especially independent scientiﬁc, literary, artistic, educational or teaching activities as well as the independent

activities of physicians, lawyers, engineers, architects, dentists and accountants.

Article 15

Income from employment

Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remtmeration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. Ifthe employment is so exercised, such remuneration as is

derived therefrom may be taxed in that other State.

Nohvithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the ﬁrst—mentioned State if: a) the recipient is present in the other State for a period or periods l'tOl exceeding in the aggregate 133 (one hundred eighty three) days in any 12 (twelve) month period commencing or ending in the ﬁscal year concerned, and b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and c) the remuneration is not home by a permanent establishment or a ﬁxed

base which the employer has in the other State.

Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraﬂ operated in

international trafﬁc by an enterprise ofa Contracting State may be taxed in that State.

Article 16

Directors' fees

Directors‘ fees and other similar payments derived by a resident of a Contracting State in his Capacity as a member of the board of directors or any other similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 17

Artistes and sportspersuns

Nohivithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from his personal activities as such exercised in the other Contracting State, may be taxed in that other

State.

Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the

activities of the entertainer or sportsperson are exercised.

The provisions of paragraphs 1 and 2 shall not apply to income derived from activities exercised in a Contracting State by an entertainer or a sportsperson if the visit to that State is wholly or mainly supponEd by public funds of one or both of the Contracting States or political subdivisions or local authorities thereof. In such case, the income shall be taxable only in the Conoacﬁng State of which the entertainer or

sportsman is a resident.

Article 18

Pensions

Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of

past employment shalt be taxable only in that State.

2‘ Notwithstanding the provisions of paragraph 1, and subject to the provisions of paragraph 2 of Article 19, pensions paid and other payments made, whether periodically or in a iump—sum, under the social security legislation of a

Contracting State shall be taxable only in that State.

Article 19

Government service

1, 3) Salaries, wages and other similar remuneration, other than a pension= paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that

State or subdivision or authority shall be taxable only in that State.

b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who: (i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of

rendering the services.

a) Notwithstanding the provisions of paragraph 1, any pension and other similar remuneration paid by, or out of funds created by, a Contracting State or a political subdivision or a locat authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

b) However such pension and other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

The provisions of Articles 15, I6, 17. and 18 shall apply to salaries,

wages, pensions and other similar remuneration, in respect of services rendered in

connection with a business carried on by a Contracting State or a political subdivision

or a local authority thereof.

Article 20 Students

Payments which a student, a business apprentice or a trainee who is or was immediate] y before visiting a Contracting State a resident of the other Contracting State and who is present in the ﬁrst-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance. education or training shall not be taxed In that State, provided that such payments arise from sources outside that

S tate.

Article 21

Offshore activities

The provisions of this Article shall apply notwithstanding the provisions

of Articles 4 to 20 of this Convention.

For the purposes of this Article, the term "oﬁshore activities" means activities carried on offshore in a Contracting State in connection with the exploration or exploitation of the sea bed and sub—soil and their natural resources situated in that

State.

3, A person who is a resident of a Contracting State and carries on offshore activities in the other Contracting State shall, subject to paragraph 4, be deemed to be carrying on business in that other State through a permanent establishment or a ﬁxed

base situated therein.

The provisions of paragraph 3 shall not apply where the offshore activities are carried on for a period or periods not exceeding in the aggregate 30 (thirty) days in any 12 (twelve) month periocL For the purposes of this paragraph:

a) offshore activities carried on by a person who is associated with another person shall be deemed to be carried on by the other person if the activities in question are substantially the same as those canted on by the ﬁrst-mentioned person, except to the extent that those activities are carried on at the same time as its own activities;

b) a person shall be deemed to be associated with another person if one holds directly or indirectly at least one third of the capital of the other, or if a third person hotds directly or indirectly at least one third of the

capital ofhoth persons.

Salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment connected with offshore activities in the other Contracting State may, to the extent that the duties are performed offshore in that other State, be taxed in that other State. However, such remuneration shall be taxable only in the ftrst-meutioned State if the employment is carried on for an employer who is not a resident of the other State and for a period or periods not exceeding in the

aggregate 30 (thirty) days in any 12 (twelve) month period.

Gains derived by a resident of a Contracting State from the alienation of:

a) exploration or exploitation rights; or

b) property situated in the other Contracting State which is used in connection with the offshore activities carried on in that other State; or

c) share: deriving their value or the greater part of their value directly or indirectly from such rights or such property or from such rights and such property taken together;

may be taxed in that other State.

In this paragraph the term "exploration or exploitation rights" means rights to

assets to be produced by offshore activities can'ied on in the other Contracting State, or

to interests in or to the benefit of such assets

Article 22

Other income

Items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Convention and arising in the other Contracting State may be

taxed in that other State.

The provisions of paragraph 1 shall not apply to income, other than income from immovable property as deﬁned in paragraph 2 ofAIticle 6, if the recipient of such income: being a resident of a Connecting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a ﬁxed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or ﬁxed base. In such case the provisions of Article 7 or

Article 24, as the case may he, shall apply,

Arﬁcle 23

Limitation of beneﬁts

Notwithstanding any other provision of this Convention, a resident of a Contracting State shall not receive the beneﬁt of any reduction in or exemption from taxes provided for in this Convention by the other Contracting State if the main purpose or one of the main purposes of the creation or existence of such residency was for the resident or any person connected with such resident to obtain the beneﬁts under this

Convention that would not othemise be available.

Article 24

Elimination ofdouble taxation

In Lithuania double taxation shall be eliminated as follows:

Where a resident of Lithuania derives income which. in accordance with this Convention, may be taxed in Mexico, unless a more favourable treatment is provided in its domestic law, Lithuania shall allow as a deduction from the tax on the income of

that resident, an amount equal to the income tax paid thereon in Mexico

Such deduction in either case shall not, however, exceed that part of the income tax in Lithuania, as computed before the deduction is given, which is attributable to the

income which may be taxed in Mexico.

In Mexico double taxation shall be eliminated as follows:

Where a resident of Mexico derives income which, in accordance with this Convention, may be taxed in Lithuania, unless a more favourable treatment is provided in its domestic law, Mexico shall allow as a credit against the Mexican tax:

a) the Lithuanian tax paid on income arising in Lithuania, in an amount not

exceeding the tax payable in Mexico on such income; and

b) subject to the existing provisions of the law of Mexico, in the case of a

company owning at least 10 per cent of the capital of a company which is a resident of Lithuania and from which the ﬁrst-rncntioned company receives dividends, the Lithuanian tax paid by the distributing company with respect to the proﬁts out of which the dividends are paid

Where in accordance with any provision of the Convention income derived by a resident of a Contracting State is exempt ﬁrorn tax in that State, such State may nevertheless, in calculating the amount of tax on the remaining income of such

resident, take into account the exempted income.

Article 25

Non-Discrimination

Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances. in particular with respect to

residence, are or may be subjected This provision shall, nomithstanding the provisions

of Article 1, also apply to persons who are not residents of one or both of the

Contracting States.

The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be constmed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities

which it grants to its own residents.

Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable proﬁts of such enterprise, be deductible under the same conditions as if they had been paid to a

resident of the ﬁrstementioned State.

Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the ﬁrst-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the

ﬁrstvmeutioned State are or may be suhjectei

The provisions of this Article shall, notwithstanding the provisions of

Article 2, apply to taxes ofevery kind and description

Article 26

Mutual agreement prOCedtlre

Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 25, to that of the Contracting State of which he is a national. The case must be presented within 3 (three) years from the first notiﬁcation of the action resulting in

taxation not in accordance with the provisions of the Convention.

2‘ The competent authority shall endeavour, if the objection appears to it to be justiﬁed and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in aecotdtmce with the

Convention,

The competent authorities of the Contmcting States shall endeavour to resolve by mutual agreement any difﬁculties or doubts arising as to the interpretation or application of the Convention. They may also consult together for the elimination of

double taxation in cases not provided for in the Convention.

The competent authorities of the Contracting States may communicate with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the

preceding paragraphs.

Article 27

Exchange of information

I. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not

restricted by Articles 1 and 2.

Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of. the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes referred to in paragraph I, or the oversight of the above. Such persons or authorities shall use the infomation only for such purposes They may disclose the information in public court proceedings or in judicial decisions.
In no case shall the provisions ofparagraph 1 and 2 be construed so as to impose on a Contracting State the obligation:

a) to carry out administrative measures at variance with the laws and

administrative practice of that or of the other Contracting State; b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

c) to supply information which would disclose any trade, business. industrial, commercial or professional secret or trade process, or information. the disclosure of which would be contrary to public policy

(ordre public),

If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested infomation, even though that other State may not need such information for its own tax purposes. The obligation contained in die preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely

because it has no domestic interest in such information.

In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other ﬁnancial institution, nominee or person acting in an agency or

ﬁduciary capacity or because it relates to ownership interests in a person.

Article 28

Assistance in collection

I. The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the

mode of application of this Article.

The term "revenue claim" as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behaLt' of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Convention or any other instrument to which the Contracting States are parties, as wet] as interest, administratiVe penalties and costs of

collection or conservancy related to such amount.

When a revenue claim of a Contracting State is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue

claim of that other State.

When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures ofconservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the ﬁrst-

mentioned State or is owed by a person who has El right to prevent its collection.

Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such In additiort a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other

Contracting State.

Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall not be brought before the courts or

administrative bodies of the other Contracting States

Where, at any time aﬂer a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the ﬁrst—meutioned State, the relevant revenue claim ceases to be

a) in the ease of a request under paragraph 3, a revenue claim of the first—

mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or

b) in the case of a request under paragraph 4, a revenue claim of the ﬁrst—

mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection

the competent authority of the ﬁrst-mentioned State shall promptly notify the competent authority of the other State of that fact and1 at the option of the other State, the ﬁrst-mentioned State shall either suspend or withdraw its request.

In no case shall the provisions of this Article be construed so as to

impose on a Contracting State the obligation:

a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

b) to carry out measures which would be contrary to public policy (ordre public);

c) to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or adminisu-ative practice;

d) to provide assistance in those cases where the administrative burden for that State is clearly disproportionate to the beneﬁt to be derived by the

other Contmcting State.

Article 29

Members ofdiplomatic missions and consular posts

Nothing in this Convention shall affect the ﬁscal privileges of members of diplomatic missions or consular posts under the general rules of international law or

under the provisions of special agreements.

Anicle 30 Entry into force

The Governments of the Contracting States shall notify each other, through the diplomatic channels, the completion of the procedures required by its domestic law for the bringing into force of this Convention. This Convention shall enter into force 30 (thirty) days after the date of the later of these notiﬁcations and its provisions shall have effect:

a) in respect of taxes withheld at source, on income paid or credited on or alter the ﬁrst day of January in the calendar year next following that in which the Convention enters into force;

b) in respect of other taxes for any ﬁscal year beginning on or aﬂer the ﬁrst day of January in the calendar year next following that in which the

Convention enters into force.

Article 31

Termination

This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention, through diplomatic channels, by giving written notice of termination at least 6 (six) months before the end of any

calendar year. Ln such event, the Convention shall cease to have effect:

, a) in respect of taxes withheld at source, on income paid or credited on or

3 after the ﬁrst day of January in the calendar year next following that in which the notice is given;

b) in respect of other taxes for any ﬁscal year beginning on or aﬁer the ﬁrst day of January in the calendar year next following that in which the

notice is given.

In witness whereof", the undersigned, being duly authorised thereto, have signed

this Convention.

Done in duplicate at Mexico City on this 23 day of February 2012, in the

Lithuanian, Spanish and English languages, all texts being equally authentic. In the case

of divergence of interpretation the English text shall prevail.

For the Goivernment of the For the Government of the

Republiti of Lithuania United Mexican States

PROTOCO L

At the moment of signing the Convention between the Government of the Republic of Lithuania and the Government of the United Mexican States for the avoidance of double taxation and the prevention of ﬁscal evasion with respect to taxes on income, the undersigned have agreed that the following provisions shall form an

integral part of the Convention:

With reference to Article 4, paragraph 3

It is understood that 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.

With reference to Article 5

The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of subparagraph E), paragraph 4 of this Article.

It is understood that persons referred to in paragraph 6 of this Article are not considered the agents of an independent status provided that:

a) in their commercial or ﬁnancial relations with the enterprise conditions are made or imposed that differ from those generally agreed to by independent agents, or

b) the activities of such persons are devoted wholly or almost wholly on behalf of the enterprise.

It is understood that on the date of the signature of this Convention none ofthc agreements for the avoidance of double taxation concluded by Lithuania provide for special provision deeming an insurance enterprise of a Contracting State to have a

permanent establishment in the other Contracting State if it collects premiums or

insures risks in the territory of that other State through a dependent agent. However, if

aﬁer that date, such special provision is included in any agreement for the avoidance of double taxation concluded by Lithuania, then such provision shall automatically apply

for the purpose of this Convention.

3, With reference to Article 6 It is understood that:

a) the term “immovable propeny” as deﬁned in paragraph 2 of this Article includes options or similar rights to acquire immovable property;

b) where the ownership of shares or other corporate rights in a company entitles the owner of such shares or corporate rights to the enjoyment of immovable property held by the company= the income from the direct use, letting, or use in any other form of such right to the enjoyment may be taxed in the Contracting State in which the immovable property is situated.

With reference to Article 11

It is understood that Banco Nacional de Comercio Exterior, S.N.C.., National Financiem S.N.C. or Banco Nacional de Obras y Servicios Pﬁblieos, SNVCV are ﬁnancial institutions wholly owned by the Government of Mexico to which the

provisions of paragraph 3 of this Article apply V

5 With reference to paragraph 6 ofArticle ll and paragraph 5 of Article 12

It is understood that where a loan has been contracted by the head ofﬁce of an enterprise of one of the States and only a part of such loan is attributed to a permanent establishment of that enterprise in the other Contracting State, or where a contract under which royalties are paid has been concluded by such head oﬁice and only a part of such contract is attributed to such pemianent establishment. then such loan or such contract is for that part to be considered as an indebtedness or a contract connected with that

permanent establishment.

With reference to Article 13

t The Contracting States agree that where in any Convention between Mexico and third country Mexico agrees to a lower rate of tax than 20 per cent in respect of gains speciﬁed in paragraph 3 of this Article to the extent such gains are derived by the alienator having the same or higher participation in the capital of the company, such lower rate of tax shall automatically be applied for the purposes of paragraph 3 of this Article with effect ﬁ'om the date of entry into force of that Convention, or of this

Convention, whichever is the later.

7, With reference to this Convention It is understood that in the case of Mexico the ﬁxed base will be treated in

accordance with the principles that apply to permanent establishment.

Done in duplicate at Mexico City on this Lithuanian, Spanish and English languages, all texts being equally authentic. In the case of divergence of interpretation the English text shall prevail.

For the Government of the For the Government of the

Republic of Lithuania United Mexican States

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