The Secretary of State to the Netherlands Chargé ( Van Asch van Wyck )
Sir: The Department informs you of the receipt of a communication from the Treasury Department1 regarding the draft of a Royal Decree, with English translation, to be issued by Her Majesty the Queen of the Netherlands, relative to the prevention of double taxation on income derived exclusively from the operation of ships, which was left at the Treasury Department on July 29, 1926. The English translation of the proposed decree reads as follows:
“We, Wilhelmina, by the Grace of God, Queen of The Netherlands, Princess of Orange-Nassau etc. etc.
“Whereas it is provided in the Unique Section of the Law of June 26, 1926, (Statute book No. 209), that we reserve Ourselves under No. 2 to make provisions, on a basis of reciprocity, preventing double taxation on earnings derived from the operation of ships, corresponding with equivalent provisions existing in the laws of foreign nations; and
“Whereas under Section 213, litt. b, No. 8 of the Revenue Act of the United States no tax is imposed on the income of an alien individual non-resident in the United States or of a foreign corporation which consists exclusively of earnings derived from the operation of a ship or ships documented under the laws of a foreign country which grants an equivalent exemption to citizens of the United States and to corporations organized in the United States, do hereby proclaim and make known:
“citizens of the united states non-resident in the netherlands and corporations organized in the united states which effectuate in the netherlands the sea transport with ships documented under the law of the united states are (with retroactive power till january 1, 1921) not subject to taxation as far as income derived exclusively from such industry is concerned.”
The Treasury Department states that it interprets the proposed decree as exempting from tax the income from sources within the [Page 760] Netherlands received by citizens of the United States non-resident in the Netherlands and by corporations organized in the United States, which consists exclusively of earnings derived from the operation of ships documented under the laws of the United States, such exemption applying to income received on or after January 1, 1921. It notes that the exemption is granted to corporations organized in the United States without limiting such exemption in any way.
The Treasury Department states that the decree as submitted to it meets the equivalent exemption requirements of Section 213(b) (8) of the United States Revenue Acts of 1921, 1924 and 1926.
I shall be pleased to have you inform me when the decree is issued.
- Not printed.↩