Treasury Welcomes Entry Into Force Of Protocols, New Tax Treaty

by Mike Godfrey, Tax-News.com, Washington

03 January 2008

The US Treasury Department announced on Wednesday that three protocols and one new tax treaty and protocol have entered into force.

Protocols amending existing tax treaties with Germany, Denmark and Finland, along with a new income tax treaty and protocol with Belgium entered into force December 28, 2007, following exchanges in Washington, DC of required notifications and instruments of ratification.

All generally apply to tax years beginning on or after January 1, 2008. Certain provisions of the protocols with both Germany and Finland are retroactively effective, however, on or after January 1, 2007.

Provisions of the protocol with Germany include:

• Elimination of source-country withholding taxes on certain dividends;
• Modernization of the treaty's limitation of benefits provision; and
• Mandatory arbitration of certain cases that cannot be resolved by the competent authorities within a specified period.

Provisions of the protocol with Denmark include:

• Elimination of source-country withholding taxes on certain dividends; and
• Modernization of the treaty's limitation of benefits provisions.

Provisions of the protocol with Finland include:

• Elimination of source-country withholding taxes on certain dividends;
• Elimination of source-country withholding taxes on royalty payments; and
• Modernization of the treaty's limitation of benefits provision.

Provisions of the new treaty and protocol with Belgium include:

• Elimination of source-country withholding taxes on interest payments;
• Elimination of source-country withholding taxes on certain dividends;
• Improved exchange of information between the United States and Belgium;
• Modernization of the treaty's limitation of benefits provision; and
• Mandatory arbitration of certain cases that cannot be resolved by the competent authorities within a specified period.

The protocol with Germany was signed in Berlin on June 1, 2006; the protocol with Denmark in Copenhagen on May 2, 2006; the protocol with Finland in Helsinki on May 31, 2006; and the treaty and protocol with Belgium in Brussels on November 27, 2006.

The Senate approved the protocols with Denmark and with Finland on November 16, 2007, and the protocol with Germany and new treaty and protocol with Belgium on December 14, 2007.

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