811.512362 Shipping/12
The Secretary of State to the Chargé in Germany (Robbins)
Sir: The Department refers to your despatch No. 734 of September 12, 1924, in regard to the taxation by Germany of the earnings derived from the operation of ships documented under the laws of the United States, with which you enclosed a copy and translation of a note dated September 3, 1924, from the Foreign Office, together with 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.
Under date of October 3, 1924, copies of your despatch and its enclosures were transmitted to the Treasury Department for its consideration and the Department is now in receipt of the Treasury Department’s reply of October 31, 1924, the substance of which is as follows:
After careful consideration, this Department is of the opinion that in view of the categorical statement of the German Government and the proposed amendment by the Commonwealth Minister of Finance to his order of August 10, 1923, Germany will meet the equivalent exemption provision of Section 213 (b) (8) of the Revenue Act of 1924, upon the issuance of the necessary orders referred to in the Note under consideration. The same opinion is herein [Page 196] expressed with respect to the years 1921, 1922 and 1923, under the provision of Section 213 (b) (8) of the Revenue Act of 1921.
Accordingly, it is requested that the German Government be apprised that upon completion of the action proposed in the Note of the Foreign Office of September 3, 1924, the equivalent exemption provision of Section 213 (b) (8) of both the Revenue Acts of 1921 and 1924 will be satisfied and that the income of a nonresident alien or foreign corporation from sources within the United States which consists exclusively of earnings of a ship or ships documented under the laws of Germany will be exempt from Federal Income tax and that such exemption will be applicable for the year 1921 and subsequent years. In this connection it should be pointed out that certain German shipping concerns have been granted until December 15th to complete their 1923 tax returns and it is desirable that this information be communicated to the German Government as expeditiously as possible. This Department would appreciate prompt advice of the action of the competent German authorities.
You will observe from the foregoing that the Treasury Department refers to the categorical statement of the German Foreign Office “that the German Government will abstain from a supplementary collection of taxes for the period since January 1, 1921, if the American Government grants reciprocity” and that this statement is a “binding official declaration of the German Government”. You will also observe that the Treasury Department states that in view of this categorical statement and a proposed amendment by the Commonwealth Minister of Finance to his Order of August 10, 1923, it considers that Germany will meet the equivalent exemption provision of Section 213 (b) (8) of the Revenue Act of 1924 upon the issuance of the necessary orders referred to in the note of the Foreign Office of September 3, 1924. The Treasury Department expresses the same opinion with respect to the years 1921, 1922 and 1923 under the provision of Section 213 (b) (8) of the Revenue Act of 1921.
In compliance with the suggestion of the Treasury Department it is desired that you advise the Foreign Office that upon the completion of the action proposed in its note of September 3, 1924, the equivalent exemption provision of Section 213 (b) (8) of both of the Revenue Acts of 1921 and 1924 will be satisfied and that the income of a nonresident alien or foreign corporation from sources within the United States which consists exclusively of earnings of a ship or ships documented under the laws of Germany will be exempt from Federal income tax and that such exemption will be applicable for the year 1921 and subsequent years. You will observe that the Treasury Department states that as certain German shipping concerns have been granted until December 15 to complete their 1923 tax returns, it is desirable that this information be conveyed to the German authorities as expeditiously as possible.
[Page 197]It is desired that you advise the Department as soon as possible with respect to the action taken by the German authorities in the matter of the proposed amendment by the Minister of Finance of his Order of August 10, 1923, so that the Treasury Department may, in turn, be definitely advised in the premises,
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