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Current income tax treaty developments.

EXECUTIVE SUMMARY

* Despite requests from large U.S. multinationals, Treasury has indicated that it will not yet renegotiate the U.S.-Japan treaty.

* The treaties with Estonia, Latvia and Lithuania have not yet been ratified by the Senate.

* The U.S. has agreed to allow a partial FTC for taxes paid to Italy under the IRAP.

Relatively speaking, 1998 was a rather slow year in the income tax treaty area; only three new treaties and one new protocol were signed. This article provides highlights of recent income tax treaty activity and focuses on the salient aspects of the new treaties with Estonia, Latvia and Lithuania.

Compared to the hst five years, 1998 was a relatively slow year for U.S. income tax treaty developments. The U.S. signed three essentially identical treaties with the Baltic Republics (Estonia, Latvia and Lithuania) on Jan. 15, 1998; those were the only U.S. income tax treaties signed during the year. A protocol to the U.S.-Germany estate tax treaty was signed on Dec. 14, 1998.

In comparison, 1999 promises to be a much more eventful year, beginning with the signing of a new treaty with Venezuela on Jan. 25, 1999. A new treaty was initialed with Italy in November 1998 that is expected to be signed shortly. Treaty negotiations were also reported during 1998 with Canada, Denmark, Korea, Slovenia and the U.K. However, despite requests from some of the largest U.S. corporations (includingAmway, Baxter International, Coca-Cola, DuPont, Eli Lilly, Microsoft and Xerox), Treasury has indicated that it will not yet renegotiate the U.S.-Japan treaty.(1) This article reviews the past year's activity in this area.

Treaties and Protocols Taking Effect in 1998

* Austria

The treaty signed May 31, 1996 replaced a 1956 agreement and entered into force Feb. 1, 1998. Reduced withholding rates apply for payments on or after April 1, 1998; otherwise, the treaty is generally effective for fiscal periods beginning after 1998. Taxpayers may elect to apply the existing Austrian treaty for the first year the new treaty is in effect.

* Ireland

The treaty signedJuly 28, 1997 replaced a 1949 agreement and entered into force Dec. 17, 1997. The treaty is generally effective for payments and tax periods beginning after 1997.

Taxpayers may elect to apply the existing Irish treaty for the first year the new treaty is in effect.

Certain provisions in the limitation on benefits article may be deferred for the first three years the new treaty is in effect.

* South Africa

The treaty signed Feb. 17, 1997 replaced a 1946 treaty (which was terminated in accordance with the Anti-Apartheid Act, effective July 1, 1987) and entered into force Dec. 28, 1997; it is generally effective for payments and tax periods beginning after 1997.

* Switzerland

The treaty signed Oct. 2, 1996 replaced a 1951 agreement and entered into force Dec. 19, 1997. Reduced withholding rates are effective for payments on or after Feb. 1, 1998; otherwise, the treaty is generally effective for tax periods beginning after 1997. Taxpayers may elect to apply the existing Swiss treaty for the first 12 months the new treaty is in effect.

* Thailand

The treaty signed Nov. 26, 1996 replaced an unratified 1965 agreement and entered into force Dec. 15, 1997. Reduced withholding rates are effective for payments on or after June 1, 1998; otherwise, the treaty is generally effective for tax periods beginning afier 1997.

* Turkey

The first-ever income tax treaty with the U.S. was signed March 28, 1996 and entered into force Dec. 19, 1997. The treaty is generally effective for payments and tax periods beginning after 1997.

Treaties Approved in 1997, But Not Yet In Force

* Luxembourg

A treaty replacing a 1962 agreement was signed April 3, 1996 and approved by the Senate Oct. 31, 1997. While the Luxembourg Parliament approved the new treaty in January 1999, it has not yet entered into force. The U.S. Senate attached a declaration to its Resolution of Advice and Consent prohibiting the new treaty from entering into force until the treaty on Mutual Legal Assistance in Criminal Matters(2) (MLAT) between the U.S. and Luxembourg enters into force.

The U.S. Senate ratified the MLAT on Oct. 21, 1998. According to a Luxembourg embassy official, although the Luxembourg Parliament has no particular objections to the MLAT, it has not yet approved it. Until Luxembourg approves the MLAT and instruments of ratification are exchanged, the income tax treaty remains in limbo.

Once in force, the income tax treaty will generally be effective for payments and tax periodsbeginning on or after January 1 of the year following entry into force (Jan. 1, 2000, if the treaty enters into force in 1999). Taxpayers will be permitted to elect to apply the existing Luxembourg treaty for the first year the new treaty is in effect.

Treaties Signed in 1998, Awaiting Senate Ratification

* Estonia, Latvia, Lithuania

On Jan. 15, 1998, Treasury announced the signing of treaties with Estonia, Latvia and Lithuania, all of which had been initialed in May 1997. These agreements are the first income tax treaties between the U.S. and these countries. The treaties were reportedly sent to the Senate for approval on June 16, 1998.(3) However, the Senate Foreign Relations Committee (which is responsible for reviewing and recommending treaties) did not hold a hearing on these agreements during 1998.

Treaties Initialed in 1998

* Italy

On Nov. 25, 1998, the U.S. and Italy initialed a new income tax treaty. Once signed, ratified and in force, the new treaty will replace a 1984 agreement. The new treaty may reduce withholding rates and should reflect significant changes in Italian income tax law, including the replacement of one tax with another (discussed below).

* Venezuela

On Aug. 18, 1998, the U.S. and Venezuela initialed the frost income tax treaty between the two countries; it was signed on Jan. 25, 1999. Once in force, it will be the first income tax treaty between the U.S. and a South American country.

Other Agreements

* Germany

A protocol(4) was signed on Dec. 14, 1998; once in force, it will amend the 1980 estate and gift tax treaty. The protocol is intended to address two significant changes made to the U.S. estate and gift tax laws. The Technical and Miscellaneous Revenue Act of 1988 significantly limited the unified credit for estates of nonresident non-U.S, citizen decedents and eliminated the marital deduction for gifts and bequests to non-U.S, citizen surviving spouses.

For 1999, under Sec. 2010, U.S. residents and citizens are generally allowed a $211,300 unified credit, which shelters the first $650,000 of property from U.S. estate tax. On the other hand, a nonresident noncitizen of the U.S. is generally allowed only a $13,000 unified credit, under Sec. 2102(c). This amount shelters only the first $60,000 of U.S.-situs property from U.S. estate taxation.

The protocol will allow the estate of a non-U.S, citizen resident in Germany a unified credit equal to the greater of (1) the U.S. citizen or resident credit ($211,300 for 1999), pro rated based on the ratio of U.S.-situs property to worldwide property or (2) the credit ($13,000) allowed nonresident non-U.S. citizens. The protocol also partially restores the marital deduction if (1) at the time of death, the decedent was domicfied in Germany or the U.S.; (2) at the decedent's death, the surviving spouse was domiciled in Germany or the U.S.; (3) both the decedent and the surviving spouse were domiciled in the U.S. at the time of the decedent's death, one or both was a citizen of Germany; and (4) the executor makes an irrevocable election and waives irrevocably any marital deduction otherwise allowable under the Code on the U.S. estate tax return. The marital deduction will be limited to the lesser of the value of the qualifying property transferred to the surviving spouse or the applicable exclusion amount (i.e., the amount of property that would qualify for the unified credit ($650,000 for 1999)).

The protocol will generally be effective for deaths occurring after the date it enters into force. However, it may be applied retroactively to deaths occurring after Nov. 10, 1988, if the claim for treaty benefits is fried within one year of the date the protocol enters into force or within the ordinary statute of limitations.

* Italy

Traditionally, Italy has imposed two levels of income tax: the imposta sul reddito delle persone giuridiche (IRPEG), a 37% tax on an Italian resident company's worldwide net income, and the imposta locale sul redditi (ILOR), a 16.2% tax on Italian-source income. UnderArts. 2 and 23 of the current U.S.-Italian income tax treaty, both the IRPEG and the ILOR were income taxes for which a foreign tax credit (FTC) could be claimed.

Effective Jan. 1, 1998, the ILOR was repealed and replaced by the imposta regionale sulle attivata produttive (IRAP). The IRAP is a 4.25% tax generally imposed on a company's Italian income; no deduction is permitted for certain expenses, such as interest or labor. For banks, the IRAP rate is 5.4%; no deduction is allowed for labor expenses.

The U.S. does not consider the IRAP to be an income tax substantially similar to the ILOR or an "in lieu of" tax under Sec. 901 or 903; thus, it would not allow an FTC for the IRAP under the current treaty. In March 1998, a mutual agreement was reached in accordance with Art. 25 of the current U.S.-Italy income tax treaty (Mutual Agreement Procedure) under which the U.S. agreed to allow a partial FTC for taxes paid to Italy under the IRAP. In general, the credit equals the "applicable ratio" multiplied by the "total IRAP paid or accrued." The "applicable ratio" is the "adjusted base" divided by the "total tax base on which IRAP is actually imposed." The "adjusted base" is the greater of (1) zero or (2) the total tax base on which IRAP is actually imposed, less the total labor and interest expense not otherwise taken into account in determining the total tax base on which IRAP is actually imposed. Two examples are provided in the agreement to explain the application of the partial credit.

The mutual agreement is effective only for IRAP accrued during a taxpayer's first tax year that begins during the period starting on Oct. 1, 1997 and ending on Dec. 31, 1998. Because the U.S. and Italy initialed a draft of a new convention and protocol on Nov. 25, 1998, the mutual agreement applies until the new convention and protocol enter into force. If a new treaty had not been initialed before the end of 1998, the mutual agreement would have terminated and would not have applied to any tax year beginning after 1998.(5)

* Mexico

The income tax treaty between the U.S. and Mexico entered into force on Dec. 28, 1993. The reduced rates of withholding on dividends, interest and royalties are effective for payments made after 1993. Generally, the dividend withholding rates are 5% on dividends paid to a company directly owning at least 10% of the payer's voting stock (the "major" rate) and 10% in all other cases (the "minor" rate). However, under a special rule, for the first five years the treaty was in force, the minor rate was 15%, not 10%.(6) Because the five-year phase-in has elapsed, for dividend payments after 1998, the 10% minor rate should apply.

Before 1999, Mexico did not impose withholding tax on dividends paid by Mexican corporations to Mexican nonresidents. However, Mexico has enacted withholding for dividends paid by Mexican corporations to U.S. residents after 1998, at a general rate of 5%. Certain gross-ups are required in determining the dividend subject to the tax, resulting in a 7.6% effective rate. It is unclear whether Mexico intends to honor the 5% withholding tax limit in the treaty. The dividend payer will be required to withhold on the grossed-up amount (7.6% effective rate); the U.S. shareholder will be required to ffie for a refund in Mexico for the excess withholding.

For the first five years the treaty was in force, the withholding rate for interest was (1) 10% on loans by insurance companies and banks (including investment and savings banks) and on bonds or securities regularly and substantially traded on a recognized securities market; (2) 15% if paid by banks (including investment and savings banks) or by the purchaser of machinery and equipment to the seller for a sale on credit; and (3) 15% in all other cases. Effective for interest payments after 1998, the withholding rates are reduced to 4.9% on interest described in (1), 10% on interest described in (2) and 15% in all other cases.(7) The 4.9% rate also applies for purposes of the branch-level interest tax on banks and insurance companies.(8) The withholding rate on royalties remains unchanged at 10%.(9)

* UAE

The IRS published a bilateral agreement between the U.S. and the United Arab Emirates (UAE) providing for a reciprocal exemption from income tax for income derived in the international operation of hips and aircraft. The reciprocal exemption entered into force on Dec. 1, 1997, and is effective for tax years after 1993. However, the agreement applies to a UAE corporation only if it meets the ownership or publicly traded requirements in Sec. 883(c).(10)

Treaties and Protocols Signed in 1998

* Estonia, Latvia, Lithuania

These three treaties contain substantially similar provisions and generally follow the U.S. and Organization for Economic Cooperation and Development models; the discussion below generally treats the three agreements as one, while noting differences.

Withholding rates

* Dividends: A 5% rate applies to dividends paid to a beneficial owner (i.e., a company owning directly at least 10% of the payer's voting stock); the rate is 15% in all other cases (including dividends paid by a U.S. regulated investment company (RIC)). Dividends paid by a real estate investment trust (REIT) will also be subject to the 15% rate if an individual owning a less-than-10% interest in the REIT beneficially owns the dividend; otherwise, the statutory rate applies.(11)

In 1997, in response to pressure from the REIT lobby, Treasury revised its REIT policy, which is not reflected in the treaties. Under the revised policy, dividends from a REIT will be subject to the 15% rate if (1) the beneficial owner is an individual holding a 10%-or-less interest in the REIT; (2) the beneficial owner owns a 5%-or-less interest in each class of REIT stock and the dividends are paid on a publicly traded class of REIT stock; or (3) the beneficial owner owns a 10%-or-less interest in the REIT and the REIT is diversified.(12) A REIT's assets are diversifted if no single property in the REIT portfolio is worth more than 10% of the portfolio's total value. Each contracting state (CS) may also impose a 5% branch profits tax.

* Interest: The rate is generally 10%.(13) Interest paid to, guaranteed or insured by the government of either CS, paid to the central bank of either CS or arising from the sale on credit of any merchandise or industrial, commercial or scientific equipment (unless between related parties) is exempt.(14) Contingent interest will be subject to the 15% rate applicable to dividends.(15) The U.S. statutory rate applies to an excess inclusion with respect to a residual interest in a real estate mortgage investment conduit.(16) Each state may impose a 10% branch tax on excess interest.(17)

* Royalties: A 5% rate applies to royalties paid to use industrial, commercial or scientific equipment; otherwise, the rate is 10%.(18) Royalties are deemed to arise in a CS when the payer is a resident of that state. However, when the payer has a permanent establishment (PE) or fixed base in the other CS, in connection with which the liability to pay the royalties was incurred and the royalties are borne by the PE or fixed base, the royalties are deemed to arise in the CS in which the PE or fixed base is located.(19) When this rule does not treat royalties as being from sources in one of the two CSs and the royalties are for the use of (or the right to use) any property or right described above in one of the CSs, the royalties are deemed to arise in that CS.(20) Payments for the use of containers (including trailers, barges and related equipment for the transport of containers) in the transportation of passengers or property (other than transportation solely between places in a CS), not covered by Art. 8 (Shipping and Air Transport), are deemed to arise in neither CS.(21)

Other Provisions

* Taxes covered: The treaties apply to U.S. income taxes (excluding accumulated earnings, personal holding company and Social Security taxes) and the excise tax on private foundations' investment income.(22)

* Resident: A passthrough entity (e.g., a partnership, estate or trust) is a resident only to the extent its income is subject to tax in a CS as income' of a resident, either in its hands or in the hands of its partners or beneficiaries.(23)

* PE: A building site or construction or installation project will be a PE if the site, project or activity continues for more than six months. In addition, in the case of Estonia, an-installation or drilling rig or ship used for the exploration or exploitation of natural resources will be a PE if the site, project or activity lasts more than six months.(24)

An independent agent may be treated as a dependent agent giving rise to a PE when all (or almost all) of the agent's activities are performed on behalf of the enterprise and the conditions between the agent and the enterprise differ from those that would be made between two independent persons.(25)

* Income fiom immovable (real)property: In general, income derived by a resident of one CS from immovable (real) property located in the other CS may be taxed in the other CS.(26) "Immovable (real) property" is defined to include the ordinary types of property included in most treaties (i.e., livestock and equipment used in agriculture and forestry, etc.). However, the term also includes an option or similar right to acquire immovable (real) property.(27) In the case of Latvia and Lithuania, rights to assets to be produced by the exploration or exploitation of the seabed and subsoil and their natural resources in a CS (including rights to interests in or to the benefits of such assets) are also considered immovable (real) property.(28)

A unique provision states that, when the ownership of shares or other corporate rights in a company entitles the owner to the enjoyment of immovable property held by the company, any income from the direct use, letting or use in any other form of this right to enjoyment may be taxed in the CS in which the immovable property is situated.(29) This rule is also found in the treaties with Finland, France and Spain.(30) According to the Treasury's Technical Explanation to the Finland treaty, the rule is intended to clarify that this type of income is income from immovable property, not income from movable property.(31)

Finally, as with many other recent treaties, a resident of a CS can elect to compute its tax on income from immovable (real) property located in the other CS on a net basis.(32)

* Business profits: As with several other treaties with developing nations, a limited force-of-attraction rule provides that profits from the sale of goods or merchandise or other business activities carried on by a resident of one CS in the other CS of the same kind as those sold or carried on by a PE in the other CS may be attributed to that PE and taxed in the other CS. However, this rule applies only if it can be shown that the PE, to avoid tax in the CS where located, did not carry out the sales or activities.(33)

* Capital gains: In general, gains or income derived by a resident of a CS from the alienation of immovable (real) property situated in the other CS may be taxed in that other CS. For this purpose, immovable (real) property includes shares of stock of a company whose assets consist at least 50% of immovable (real) property situated in the other CS.(34)

* Independent personal services: An individual deriving income from independent personal services will be taxable only in his CS of residence, unless they are performed in the other CS and are attributable to a fixed base regularly available to him there for purposes of performing those activities. An individual performing services in the other CS for 183 days or more in any 12-month period will be deemed to have a fixed base in that CS. Income from services performed there will be attributable to that fixed base and subject to tax in that CS.(35)

* Students, trainees and researchers: The treaties contain extensive provisions dealing with income earned by students, trainees and researchers. An individual who is resident in one CS but temporarily present in the other CS will be exempt from tax for five years on certain amounts if the primary purpose of the visit is to (1) study at a university or other accredited educational institution; (2) secure professional or specialty training; or (3) study or perform research as a recipient of a grant, allowance or award from a governmental, religious, charitable, scientific, literary or educational organization. Amounts qualifying for the exemption include (1) payments' from abroad (other than compensation for personal services) for the purpose of maintenance, education, study, research or training; (2) the grant, allowance or award; and (3) income from personal services performed in that other CS in an aggregate amount not exceeding $5,000 or its equivalent in the other CS's currency for any tax year.(36)

An individual who is resident in one CS but temporarily present in the other as an employee of (or under contract with) a resident of the first CS will be exempt from tax on the first $8,000 (or its equivalent in the other CS's currency) of income from personal services earned during the first 12 months if the primary purpose of the visit is to (1) acquire technical, professional or business experience from a person other than that resident in the first CS or (2) study at a university or other accredited educational institution in that other CS.(37)

An individual who is resident in one CS but temporarily present in the other CS for a period not exceeding one year to participate in a program sponsored by the government of the other CS for the primary purpose of training, research or study will be exempt from tax on the first $10,000 (or its equivalent in the other CS's currency) of income from personal services.(38)

* Offshore activities: The treaties with Latvia and Lithuania contain an article on offshore activities. The rules provided are similar to those that appear in Art. 27 of the U.S.-Netherlands treaty and Art. 27A of the U.S.-U.K. treaty. A resident of a CS carrying on activities offshore in the other CS in connection with the exploration or exploitation of the seabed and subsoil and their natural resources situated in that other CS (offshore activities) will be deemed to be carrying on a business in that other CS through a PE or fixed base therein, unless such activities are carried on for not more than 30 days in the aggregate in any 12-month period. For purposes of the 30-day rule, activities carried on by an associated person will be regarded as being carried on by the other person if they are substantially the same as those carried on by the first person (unless they are conducting activities simultaneously). A person is associated with another person if it is controlled directly or indirectly by the other, or both are controlled directly or indirectly by a third person(s). These rules do not apply to (1) activities described in Art. 5(4) (a PE); (2) towing or anchor handling by ships primarily designed for that purpose and any other activities performed by such ships; or (3) the transport of supplies or personnel by ships or aircraft in international traffic.(39)

Salaries, wages and similar remuneration derived by a resident of a CS for employment connected with offshore activities in the other CS may, to the extent the duties are performed offshore in that other CS, be taxed in that other state, unless the employment is carried on offshore for an employer who is not a resident of the other CS and for a period(s) not exceeding, in the aggregate, 30 days in any 12-month period. Salaries, wages and similar remuneration derived by a resident of a CS may be taxed in the CS of which the employer is a resident if derived from employment on a ship or aircraft engaged in the transportation of supplies or personnel to a location (or between locations) in which activities connected to offshore activities are being carried on in a CS, or on tugboats or other vessels operated auxiliary to such activities.(40)

* Other income: Income beneficially owned by a resident of a CS not covered by a specific article in the treaties will generally be taxable only in that CS, regardless of where it arises.(41) However, in the case of Estonia, income beneficially owned by a resident of one CS arising in the other CS may also be taxed in that other CS.(42)

* Limitation on benefits: With certain exceptions, treaty benefits are only granted to"qualified residents"; a resident of a CS is a "qualified resident" if it is:

1. An individual.

2. A CS, political subdivision or local authority thereof, or an agency or instrumentality of such CS, subdivision or authority.

3. A person who meets a 50% ownership and 50% base erosion test.

4. A trust or estate, if the ownership of its beneficial interests meets the 50% ownership test and its payments to persons who are not qualified residents or U.S. citizens meet the 50% base erosion test.

5. A publicly traded person or a person controlled by a publicly traded person. A company is publicly traded if 50% of the value of each class of interest in the person is substantially and regularly traded on a recognized stock exchange. A person is controlled by a publicly traded person if at least 50% of each class of interest in that person is owned (directly or indirectly) by a publicly traded person (provided each intermediate owner is also entitled to treaty benefits).

6. A tax-exempt, nonprofit organization, if more than half of its beneficiaries, members or participants are qualified residents.

7. A U.S. RIC or a similar entity in the other CS, as may be determined by the competent authority.

8. A person engaged in the active conduct of a substantial trade or business in a CS (other than the business of making or managing investments, unless conducted by a bank or insurance company) and the income derived from the other CS is connected with (or incidental to) that business.

9. A resident of a CS who is not a qualified resident deriving income arising in the other CS, if the competent authority of that other CS so determines.(43)

* Relief from double taxation: In general, Estonia, Latvia and Lithuania will relieve double taxation by allowing a resident who derives income subject to U.S. tax (other than under the savings clause) to deduct the U.S. income tax from the tax due. The deduction may not exceed that part of the income tax, as computed before the deduction is given, attributable to the income that may be taxed in the U.S.(44) Under a special source rule, for purposes of allowing relief from double taxation, income derived by a resident of a CS that may be taxed in the other CS (other than under the savings clause) will be deemed to arise in that other CS.(45)

* Entry into force: The treaties will enter into force on the date instruments of ratification are exchanged. For withholding taxes, the treaties will be effective for payments made on or after the January I of the year following entry into force; for taxes on other income, the treaties will be effective for tax years beginning on or after the January 1 of the year following entry into force.(46) Thus, if the treaties enter into force during 1999, they will be effective for payments and tax years beginning after 1999.

(1) See 98 Tax Notes Int'l 176-33 (9/11/98), 98 Tax Notes Int'l 210-23 (10/30/98) and 98 Tax Notes Int'l 210-24 (10/30/98).

(2) Treaty Between the Government of the United States of America and the Government of the Grand Duchy of Luxembourg on Mutual Legal Assistance in Criminal Matters Signed at Washington on March 13, 1997.

(3) See Fuller, "U.S. Tax Review," 98 Tax Notes Int'l 143-15 (7/27/98).

(4) Protocol Amending the Convention Between the United States and Germany for the Avoidance of Double Taxation with Respect to Taxes On Estates, Inheritances, and Gifts, Art. 3.

(5) See IR-INT-98-6 (3/31/98).

(6) Convention Between the Government of the United States of America 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 (hereinafter, "Mexico Treaty"), Art. 10(2) and (3).

(7) Mexico Treaty, Art. 11(2) and (3).

(8) Mexico Treaty, Art. 11A(2)(b).

(9) Mexico Treaty, Art. 12(2).

(10) See IRB 1998-43, 6.

(11) Convention Between the United States of America and the Republic of Estonia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (hereinafter, "Estonia Treaty"), Art. 10(2); Convention Between the United States of America and the Republic of Latvia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (hereinafter, "Latvia Treaty"), Art. 10(2); Convention Between the Government of the United States of America and the Government of the Republic of Lithuania for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (hereinafter, "Lithuania Treaty"), Art. 10(2).

(12) The new policy resulted in the addition of a Senate reservation to the resolution on advice and consent to the new Luxembourg treaty and declarations being added to the resolution on advice and consent to the new treaties with Austria, Ireland and Switzerland. The new policy is reflected in Art. 10(3) of the Convention Between the Government of the United States of America and the Government of the Republic of Venezuela for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital. More information is provided in Section VI(A) of the Senate Foreign Relations Committee Report on the Convention between the Government of the United States of America and the Government of the Grand Duchy of Luxembourg for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Signed at Luxembourg on April 3, 1996.

(13) Estonia Treaty, Art. 11 (2); Latvia Treaty, Art. 11(2); Lithuania Treaty, Art. 11(2).

(14) Estonia Treaty, Art. 11(3)(a) and (b); Latvia Treaty, Art. 11(3)(a) and (b); Lithu ania Treaty, Art. 11(3)(a) and (b).

(15) Estonia Treaty, Art. 11(3)(d); Latvia Treaty, Art. 11(3)(d); Lithuania Treaty, Art. 11(3)(d).

(16) Estonia Treaty, Art. 11(3)(c); Latvia Treaty, Art. 11(3)(c); Lithuania Treaty, Art. 11(3)(c).

(17) Estonia Treaty, Art. 11(8); Lawia Treaty, Art. 11(8); Lithuania Treaty, Art. 11(8).

(18) Estonia Treaty, Art. 12(2); Latvia Treaty, Art. 12(2); Lithuania Treaty, Art. 12(2).

(19) Estonia Treaty, Art. 12(6)(a); Latvia Treaty, Art. 12(6)(a); Lithuania Treaty, Art. 12(6)(a).

(20) Estonia Treaty, Art. 12(6)(b); Latvia Treaty, Art. 12(6)(b); Lithuania Treaty, Art. 12(6)(b).

(21) Estonia Treaty, Art. 12(6)(c); Latvia Treaty, Art. 12(6)(c); Lithuania Treaty, Art. 12(6)(c).

(22) Estonia Treaty, Art. 2(1)(a); Lawia Treaty, Art. 2(1)(a); Lithuania Treaty, Art. 2(1)(a).

(23) Estonia Treaty, Art. 4(2)(b); Latvia Treaty, Art. 4(2)(b); Lithuania Treaty, Art. 4(2)(b).

(24) Estonia Treaty, Art. 5(3); Latvia Treaty, Art. 5(3); Lithuania Treaty, Art. 5(3).

(25) Estonia Treaty, Art. 5(6); Latvia Treaty, Art. 5(6); Lithuania Treaty, Art. 5(6).

(26) Estonia Treaty, Art. 6(1); Latvia Treaty, Art. 6(1); Lithuania Treaty, Art. 6(1).

(27) Estonia Treaty, Art. 6(2); Latvia Treaty, Art. 6(2); Lithuania Treaty, Art. 6(2).

(28) Latvia Treaty, Art. 6(2); Lithuania Treaty, Art. 6(2).

(29) Estonia Treaty, Art. 6(4); Latvia Treaty, Art. 6(4); Lithuania Treaty, Art. 6(4).

(30) Convention Between the Government of the United States of America and the Government of the Kepublic of Finland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital Signed at Helsinki on Sept. 21, 1989, Art. 6(4); Convention Between the Government of the United States of America and the Government of the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Signed at Paris on Aug. 31, 1994, Art. 6(5); Convention Between the United States of America and the Kingdom of Spain for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income Signed at Madrid on Feb. 22, 1990, Art. 6(5).

(31) Treasury Department Technical Explanation of the Agreement Between the Government of the United States of America and the Government of the Republic of Finland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital Signed at Helsinki on Sept. 21, 1989.

(32) Estonia Treaty, Art. 6(6); Latvia Treaty, Art. 6(6); Lithuania Treaty, Art. 6(6).

(33) Estonia Treaty, Art. 7(1); Lawia Treaty, Art. 7(1); Lithuania Treaty, Art. 7(1).

(34) Estonia Treaty, Art. 13(2); Latvia Treaty, Art. 13(2); Lithuania Treaty, Art. 13(2).

(35) Estonia Treaty, Art. 14(1); Latvia Treaty, Art. 14(1); Lithuania Treaty, Art. 14(1).

(36) Estonia Treaty, Art. 20(1); Latvia Treaty, Art. 20(1); Lithuania Treaty, Art. 20(1).

(37) Estonia Treaty, Art. 20(2); Latvia Treaty, Art. 20(2); Lithuania Treaty, Art. 20(2).

(38) Estonia Treaty, Art. 20(3); Latvia Treaty, Art. 20(3); Lithuania Treaty, Art. 20(3).

(39) Latvia Treaty, Art. 21(2), (3) and (4); Lithuania Treaty, Art. 21(2), (3) and (4).

(40) Latvia Treaty, Art. 21 (5); Lithuania Treaty, Art. 21(5).

(41) Estonia Treaty, Art. 21(1); Latvia Treaty, Art. 22(1); Lithuania Treaty, Art. 22(1).

(42) Estonia Treaty, Art. 21(3).

(43) Estonia Treaty, Art. 22(1)-(4); Latvia Treaty, Art. 23(1)-(4); Lithuania Treaty, Art. 23(1)-(4).

(44) Estonia Treaty, Art. 23(2); Latvia Treaty, Art. 24(2); Lithuania Treaty Art. 24(2).

(45) Estonia Treaty, Art. 23(3); Latvia Treaty, Art. 24(3); Lithuania Treaty, Art. 24(3).

(46) Estonia Treaty, Art. 28; Latvia Treaty, Art. 29; Lithuania Treaty, Art. 29.

Author's note: The author wishes to thank Mike Difronzo and Susan Lyons, Deloitte & Touche LLP, Washington, DC, for their helpful comments and suggestions.
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Author:Dichter, Arthur J.
Publication:The Tax Adviser
Geographic Code:1USA
Date:Jul 1, 1999
Words:6004
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