The Secretary of State to American Diplomatic Officers

Diplomatic Serial No. 2829

Sirs: The Department has recently received so many inquiries concerning the subject matter of circular instruction Diplomatic Serial No. 766 of November 9, 1928,1 in regard to the exemptions from taxation and customs duties enjoyed by foreign diplomatic and consular officers within the United States, that it has seemed advisable, in view of changes necessary therein, to issue a new circular instruction.

Ambassadors and Ministers accredited to the United States and the members of their households, including secretaries, attachés, and servants, who are not citizens of the United States, are exempted from the payment of Federal income tax upon their salaries, fees and wages, and upon the income derived by them from investments in the United States in stocks and bonds and from interest on bank balances in the United States. The income derived from any business carried on by them in the United States would, however, be taxable.

Miscellaneous federal excise taxes are imposed by the Revenue Act of 19322 on telegraph, telephone, radio and cable facilities; admissions, dues and initiation fees; transfers of stocks and bonds; conveyances; sales of produce for future delivery; passage tickets; foreign insurance policies; and safe deposit boxes.

Under the application of the principles of international law exempting from taxation ambassadors, ministers and other duly accredited diplomatic representatives of foreign governments, together with the members of their families living with them and members of their households, including attachés, secretaries, clerks and servants who are not citizens of the United States, all such diplomatic representatives, together with the other personnel above-mentioned, are entitled to exemption from the taxes mentioned in the preceding paragraph.

[Page 992]

It is understood that some foreign governments levy a transmission tax on transportation. Sections 500 of the Revenue Acts of 1917 and 19183 imposed a similar tax on transportation charges. Article 99 of Treasury Regulations 49, relating to such tax provided that ambassadors, ministers and properly accredited diplomatic representatives of any foreign government to the United States were exempt from the payment of the taxes on amounts paid for transportation services rendered them within the United States. Such tax was repealed as of December 31, 1921.4 Therefore, at the present time there is no Federal tax on transportation charges similar to the transmission tax mentioned.

In the District of Columbia there is no charge corresponding to rates payable by a tenant, and consequently diplomatic officers in Washington are not obliged to pay rates.

Property in the District of Columbia owned by foreign governments for Embassy and Legation purposes is exempt from general and special taxes or assessments. Property owned by an Ambassador or Minister and used for Embassy or Legation purposes is exempt from general taxes but not from special assessments for improvements. The payment of water rent is required in all cases, as this is not regarded as a tax but the sale of a commodity.

The President approved on August 27, 1935, H. R. 7998,5 entitled “An Act to exempt from taxation official compensation of certain foreign representatives …”, the pertinent portion of which reads as follows:

“Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 116 of the Revenue Act of 19346 relating to exclusions from gross income is amended by adding at the end thereof a new subsection reading as follows:

‘(h) Compensation of Employees of Foreign Governments.—Wages, fees, or salary of an employee of a foreign government (including a consular or other officer, or a nondiplomatic representative) received as compensation for official services to such government—

  • ‘(1) If such employee is not a citizen of the United States; and
  • ‘(2) If the services are of a character similar to those performed by employees of the Government of the United States in foreign countries; and
  • ‘(3) If the foreign government whose employee is claiming exemption grants an equivalent exemption to employees of the Government of the United States performing similar services in such foreign country.

‘The Secretary of State shall certify to the Secretary of the Treasury the names of the foreign countries which grant an equivalent exemption to the employees of the Government of the United States performing services in such foreign countries, and the character of the services performed by employees of the Government of the United States in foreign countries.’”

[Page 993]

The members of foreign diplomatic missions and foreign consular officers in the District of Columbia are exempt in the District from the payment of personal property taxes on automobiles and other personal property, either tangible or intangible, owned by them. They are furnished identification tags and operators’ permits for their automobiles, without charge, provided the applications made therefor bear the seal of the mission and the seal of the Department of State. Automobiles bearing District of Columbia tags are permitted to enter the several States without obtaining additional tags. Members of foreign diplomatic missions in the United States and foreign consular officers stationed in the District of Columbia are accordingly not required to pay the fees ordinarily charged other owners of automobiles in this country.

The fees and taxes for automobiles and other property to be charged foreign consuls in the several States of the United States, in the absence of applicable treaty provisions, are subject to regulation by the States in which the consuls are stationed. However, practically all of the States of the Union now accord to foreign consular officers on the basis of reciprocity the free registration of their automobiles.

Diplomatic officers of foreign countries residing in the United States are entitled to exemption from sales taxes, such as those imposed on gasoline, automobile tires and inner tubes if they are parties to the importation or sale which is made the subject of the tax, that is to say, if the gasoline, automobile tires or inner tubes are imported by them or purchased by them from the producer or manufacturer for their personal or official use.

By an order dated July 8, 1921, the Collector of Taxes of the District of Columbia was authorized to issue dog licenses to foreign diplomatic officers without charge.

Articles 425 and 426 of the United States Customs Regulations of 1931 provide for the granting of customs courtesies and the exemption from the payment of customs duties, to diplomatic and consular officers of foreign countries and outline the procedure to be followed by such officers in requesting these courtesies.

Foreign consular officers who are nationals of the State appointing them and not engaged in any other business and their families are accorded the privilege of the free entry of their personal and household effects, including intoxicating liquors, at the time of their arrival in the United States to take up their official duties or upon their return to their posts in the United States after leave of absence. The entry of liquors into the States of the United States is governed by state laws prohibiting or regulating the importation or transportation of liquors for beverage use. (Section 2, 21st Amendment to the Constitution of the United States, adopted December 5, 1933).

[Page 994]

In the absence of applicable treaty provisions, exemption from the internal revenue tax on intoxicating liquors is not accorded consular officers.

There is enclosed a list showing the countries with which there are treaties or reciprocal agreements7 containing special provisions with respect to customs exemptions for consular officers and official supplies.

Supplies intended for official use of foreign embassies and legations and foreign consulates in the United States, such as office furniture and office material, may be entered free of duty. Exhibits of the products of foreign countries, if forming a part of the permanent exhibitions in the consulates may also be admitted free of duty.

The granting of these customs exemptions to diplomatic and consular officers of foreign countries is conditional upon the granting of similar exemptions to American diplomatic and consular officers by these countries.

Any material imported by a foreign government to be used in constructing an embassy or legation building is exempted from the payment of customs duties.

The above statement, although not exhaustive, describes some of the more important immunities and exemptions accorded foreign diplomatic and consular officers in the United States.

Should the occasion arise you may bring the foregoing information to the attention of the governments to which you are accredited, and in so doing you may state that should those governments not be disposed to grant to all American diplomatic officers in those countries in matters relating to the exemption from taxation and customs duties, privileges similar to those enjoyed by foreign diplomatic officers in the United States, this Government will have to reconsider its position with regard to the exemptions from taxation and customs duties at present enjoyed by such officials in this country.

You are instructed to make the following notation on the copies of Diplomatic Serial No. 766 in your respective missions: “Cancelled—see C. I. Dip. Ser. No. 2829.”

A copy of this instruction is being sent to the consular officers merely for their information and files.

I am [etc.]

For the Secretary of State:
G. S. Messersmith
  1. Not printed. For previous statement on diplomatic exemptions, see note to the Irish Minister, January 22, 1927, Foreign Relations, 1927, Vol. i, p. 414.
  2. 47 Stat. 169.
  3. 40 Stat. 300 and 1057, respectively.
  4. Revenue Act of 1921; 42 Stat. 227, 320.
  5. 49 Stat. 908.
  6. 48 Stat. 680.
  7. There were treaties with the following countries: Cuba, El Salvador, Estonia, Finland, Germany, Honduras, Hungary, Latvia, and Norway. Reciprocal agreements existed with the following: Bolivia, Chile, China, Ecuador, Egypt, Irish Free State, Iran, Lithuania, Netherlands, Panamá, and Sweden. The agreements with Lithuania, Panamá, and Iran pertained only to Consuls on temporary assignments.