811.512362 Shipping/10

The Chargé in Germany (Robbins) to the Secretary of State

No. 734

Sir: With reference to the Department’s instruction No. 3354, dated March 20, 1924, concerning the taxing by Germany of earnings derived from the operation of ships documented under the laws of the United States, I have the honor to report that a communication was addressed to the Foreign Office on May 5, 1924, in the sense outlined in the Department’s instruction, and that the Embassy now has Foreign Office note verbale No. V Steu 1489/B.34881, dated September 3, 1924, in reply, a copy and translation of which are enclosed herewith.

With reference to the last paragraph of the Department’s instruction under reference, there are also enclosed herewith a copy of the German Ordinance of January 5, 1924, and a translated copy of Section 108, subdivisional, of the Federal Tax Law of Germany. These documents were furnished the Embassy by the Foreign Office. There is also transmitted herewith a translation of the former document made by the Embassy.

I have [etc.]

Warren D. Robbins
[Enclosure 1—Translation92]

The German Foreign Office to the Americans Embassy

No. V Steu 1489/B 34881

Note Verbale

The Foreign Office has the honor to inform the Embassy of the United States of America, in response to the latter’s Note No. 686 of May 16 last,93 relative to exemption from income tax of both German and American shipowners, as follows:

The Federal Minister of Finance is now ready in principle to amend his order of August 10, 1923, in accordance with the wishes of the Government of the United States of America as conveyed in the Embassy’s Note Verbale No. 675 of May 5, 1924, and to cause instructions to be issued to the subordinate financial authorities that the order of August 10, 1923, is to be applied to all companies which have their seat in the United States of America regardless of the location of their management.

[Page 194]

As concerns the conditions for abstention from collection of taxes from January 1, 1921, referred to in the last-mentioned note verbale, the Foreign Office can only repeat the statement based on the official findings of the Federal Minister of Finance and contained in its Note No. V Steu 30 of January 19, 1924,94—the statement that since January 1, 1921, the income from the operation of ships of American shipping companies and citizens who have no residence in Germany has not been subjected to the German income tax or corporation tax. Furthermore, the German Government will abstain from a supplementary collection of taxes for the period since January 1, 1921, if the American Government grants reciprocity. The statement previously made by the Foreign Office through the usual diplomatic channels is a binding official declaration of the German Government.

The Foreign Office requests the Embassy of the United States of America to inform its Government of the above and to acquaint the Foreign Office with the American Government’s attitude as soon as possible so that, if an agreement is reached between the German and American Governments, the Federal Minister of Finance may issue suitable instructions to the financial authorities.

[Enclosure 2—Translation95]

The German Minister of Finance to the State Finance Offices, Section for Property and Traffic Taxes, Königsberg, Mecklenburg-Lübeck in Schwerin, Oldenburg, Schleswig-Holstein in Kiel, Stettin, Unterelbe in Hamburg, Unterweser in Bremen

III C 14722/III D 5

Through a decree dated August 10, 1923 (III C 7412) I have ordered, on condition of complete reciprocity and with the reservation of cancellation at any time on the basis of section 108, paragraph 1, of the Federal Tax Law, that the income derived exclusively from the operation of ships of companies (juridical persons) whose seat and place of management is in the United States of America shall not be subjected to the corporation tax. On the same condition, I declare myself in agreement that the income derived exclusively from the operation of ships by citizens of the United States (natural persons) who have no residence in Germany shall be exempt from the income tax. I request that the financial offices charged with the assessment of taxes be informed thereof.

[Page 195]

In case doubt should arise in individual cases, I request that a report be made thereon.

By direction:
[Enclosure 3—Translation]

Section 108 of the Federal Tax Law of Germany of December 13, 191996

In particular cases the Reichsfinanzminister may, wholly or in part, abate any taxes the collection of which would, with a view to the circumstances of the case, be unfair, or he may in such cases decree the taxes already paid to be refunded or credited to account. As regards specific types of cases, the above authority may be transferred to the Landesfinanzaemter or to the Finanzaemter.

As regards cases of a specific type, the Reichsfinanzminister may, for reasons of fairness and with consent of the Reichsrat, generally provide for exemption from, or reduction of taxes as well as for taxes already paid to be refunded or credited to account.

  1. File translation revised.
  2. Not printed.
  3. Ante, p. 190.
  4. File translation revised.
  5. Reichsgesetzblatt, S. 1993.