Mr. Harris to Mr.
Hay.
United
States Legation,
Vienna, May 9,
1899.
No. 6.]
Sir: I have the honor to submit for your
consideration and instruction the following case:
Mr. H. M. Braem is an American citizen now in Vienna. I inclose a copy of
a letter by him, addressed to me, which states his case. I inclose also
a copy of the law and also a translation of so much of the law as seems
to bear on the case.
The case derives greater importance from the fact, as I am informed by
him, that other Americans and Englishmen similarly situated are now
contesting their several liabilities under the law. But they, Mr. Braem
states, are making the contest through other channels and have perhaps
angered the authorities. At most, Mr. Braem says, the authorities
advised him, if he is determined to resist, to submit his case through
this legation to the foreign office.
[Page 49]
I find no books in the legation treating this subject, therefore I
hesitate to affirm that, “according to international principles,”
Austria is inhibited from levying an income tax on Mr. Braem.
I shipped some books on international law, but they are not yet at my
command.
As this is to be perhaps what is sometimes called a “leading case,” I
deem it best to take the advice of the Department.
The seeming effect of the law is to tax Americans, and not Germans,
Italians, etc., for I assume these Governments impose taxes on incomes
realized in their several jurisdictions.
It would also seem that if a foreigner imports money into Austria arising
from sales of property or produced otherwise than as named in the law it
is not taxable.
To my mind it is unjust to compel an American to pay a tax if he pend of
his income here, but not if he spends of his principal.
Awaiting your instructions, I have, etc.,
[Inclosure 1 in No. 6.]
Mr. Braem to
Mr. Harris.
Sir: I beg to lay before you the following
case and to ask your assistance in the matter. Having two married
daughters in Austria, it pleases me to reside here more or less, and
instead of living in a hotel have an apartment.
The Austrian Government last year notified me to make a return for
income tax, which I declined telling them. I had no money invested
in this country, nor did I derive any income from it in any way,
form, or shape. This year they sent a document filled up by
themselves for the return that I declined to make, and gave me until
the 25th instant to appeal from it. I answered them that I was not
liable, that I lived in an apartment as being more convenient, and
that every year I have passed three months in America and often five
out of the country.
I have now been served with still another paper for this year.
Under the circumstances I claim I am not liable to any tax here, and
that my going home once a year releases me from “more than a year
clause,” and I ask your excellency’s assistance in this to me
provoking incident.
Believe me, etc.,
[Inclosure 2 with No.
6.]
Translation of section 2 of paragraph 153 of the
income-tax law of Austria as it relates to
foreigners.
- (a)
- Those persons who are not subjects of the kingdoms and lands
represented in the Austrian Reichsrath are subjected to the
provisions of the income tax if they live within the territory
in which this law is
[Page 50]
in
force, for the purpose of gain, or if they make this territory
their domicile for a period longer than one year, as follows:
- (1)
- From the incomes which they acquire within the
kingdoms and lands represented in the Austrian
Reichsrath; or
- (2)
- From the incomes which they import into these kingdoms
and lands.
- (b)
- Incomes are, however, exempted from this tax when they are
derived from countries outside the administration of this law if
the said incomes are already subjected to an income or like tax
in the countries from which they are derived.
- (c)
- Besides the cases enumerated in division (a) foreigners are subjected to the provisions of the
income tax as follows: If they are the owners of real estate, or
of mortgages on domestic real estate, or of properties bound to
the kingdoms and lands represented in the Reichsrath, by entail
or other legal provisions, or if they are engaged in business
enterprises or occupations of profit, or are participants in
such occupation or enterprise, or, if they are the recipients of
incomes in compensations and pensions from the Austrian
treasury, from the incomes which they acquire from these
sources.
The ownership of stocks, shares, and like certificates of value is
not to be considered as participation in an enterprise in the sense
of the foregoing.
Further, undivided inheritances are subjected to the provisions of
the income tax according to paragraph 229 of this law.
exemptions.
The following foreigners are exempted from the payment of the income
tax:
Paragraph 154, section 3. The diplomatic representatives accredited
to the Imperial and Royal court and consuls of foreign nations who
are not Austrian subjects, as also the clerks and servants, in so
far as they are foreigners, employed by such representatives and
consuls, as follows:
Upon all the incomes which they do not acquire from the sources
enumerated in division B of section 2 of paragraph 153.
Section 4. Those persons who are entitled to exemption from the
provisions of the income tax in pursuance of treaties or by virtue
of international principles.
