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Protocol Amending US-Netherlands Tax Treaty Enters Into Force

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

30 December 2004


The US Treasury Department announced on Tuesday that the protocol amending the income tax treaty between the United States and the Netherlands has come into force.

Representatives from the governments of the United States and the Netherlands signed the protocol at a ceremony at the Treasury Department on March 8, 2004, and following the resolution of concerns expressed by Senator Joseph Biden (D-Del), the US Senate approved the protocol on November 17, 2004.

The protocol amends the existing US-Netherlands tax treaty, which entered into force in 1993, reflecting a modernization of the anti-treaty shopping rules to prevent inappropriate exploitation of the treaty, including a tightening of the rules applicable to publicly-traded companies to ensure real nexus between the company and its residence country.

The protocol also provides for the elimination of source-country withholding taxes on certain intercompany dividends, removing a remaining barrier to cross-border investment in both directions.

Following its entry into force on Tuesday, the protocol generally will be effective for taxable periods beginning on or after January 1, 2005. The provisions of the protocol relating to withholding taxes will be effective for amounts paid or credited on or after February 1, 2005.

"I am very pleased that this important protocol improving the long-standing tax treaty relationship between the United States and the Netherlands is now in force," US Treasury Secretary, John Snow announced, continuing:

"The enhancements reflected in the protocol will foster even closer ties between our two countries to the benefit of both our economies."


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