US/Netherlands Tax Treaty Hits Snag In Senate

by Mike Godfrey, Tax-News.com, Washington

14 October 2004

A revised double taxation treaty between the United States and the Netherlands is being held up in the US Senate over concerns from some lawmakers that its provisions will allow some individuals to improperly escape US tax liability.

The source of the delay, according to a report by Dow Jones Newswires, is a provision within the text of the treaty which allows Dutch nationals returning to the Netherlands to be exempted from US income taxes. This has drawn fire from Democrat members of the Senate Foreign Relations Committee.

However, a Senate hearing on the treaty last month drew no such objections, and the move by the Democrat members has been greeted with surprise by some observers.

The US/Dutch treaty, signed in March 2004, updates an earlier agreement concluded in 1992. According to Senate Foreign Relations Chairman Richard Lugar (R-Ind), it is estimated that the Netherlands is the third-largest foreign investor into the US economy.

The Senate will resume work on the treaty during a post-election session in November.

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