Treasury Welcomes Senate Approval Of US-Netherlands Tax Treaty

by Glen Shapiro, LawAndTax-News.com, New York

22 November 2004

The US Treasury Department last week welcomed the Senate's decision to approve a protocol amending the US income tax treaty with the Netherlands.

The approval of the revised treaty had been held up by the objections of Senator Joseph Biden (D-Del), who argued that a key provision in the agreement would allow Dutch nationals to return to Holland and escape their US tax liability. However, following further negotiations on the matter, the Senator's spokesman, Chip Unruh revealed that Biden had "given the green light" to the DTA.

Speaking following the Senate decision, Treasury Secretary John Snow observed that:

"The protocol approved by the Senate last night will improve the long-standing tax treaty relationship between the United States and the Netherlands." He added:

"These enhancements to the tax treaty will foster still closer economic ties between our two countries, bringing benefits to both countries by further reducing tax barriers to real cross-border trade and investment in both directions."

The protocol amends the existing US-Netherlands tax treaty, which entered into force in 1993, to take into account developments over the last decade, including changes in each country's tax laws and tax treaty policies. Key provisions in the protocol include the modernization of the anti-treaty shopping rules to prevent inappropriate exploitation of the treaty and the elimination of source-country withholding taxes on certain cross-border intercompany dividends.

The protocol amending the US-Netherlands tax treaty will enter into force when the two countries have notified each other that their respective requirements for ratification have been completed.

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