811.512351 Double/385
The Ambassador in France (Bullitt) to the Secretary of State
[Received November 2.]
Sir: I have the honor to refer to the Department’s instruction No. 467, dated September 24, 1937,24 announcing approaching visits to [Page 296] Paris of Mr. Eldon P. King, Special Deputy Commissioner of Internal Revenue, in connection with his journey to and from the meeting of the Fiscal Committee of the League of Nations in Geneva, and suggesting that, as it appeared possible that the French authorities who are considering the draft addendum proposed for the Franco-American Double Taxation Convention of April 27, 1932, might welcome an opportunity informally to discuss this matter with him, they be informed of Mr. King’s passage through Paris. The Department added that Mr. King believed that the most appropriate time for such discussions would be during the period October 18 to 20, inclusive, and preferably October 18, so that if a supplemental conference were found desirable it could be arranged before October 21.
The Embassy found the appropriate officials of the Ministry of Finance, who were first approached through the Foreign Office in the usual way, most desirous of conferring with Mr. King. After discussing the matter with the latter on his way through Paris on October 8, it was decided that the first informal meeting should occur on the afternoon of October 18 and that further conferences might, if necessary, take place on October 20.
Mr. Cochran25 and Mr. Fullerton26 of the Embassy accompanied Mr. King to the Ministry of Finance at three o’clock on the afternoon of October 18, where they were received by the following officials of the Ministry:
- Mr. Georges Mer, General Secretary of the Ministry of Finance, assisted by Mr. Guillet, Chief of the General Secretary’s office;
- Mr. Bizot, Counselor of State, General Director of Direct Taxation, assisted by Mr. Barrau, Administrator of Direct Taxation, and Mr. Pierre, Head of Bureau at the General Direction of Direct Taxation;
- Mr. Pelegry, Counselor at the Court of Audits, Director General of the Registration, Domain and Stamp Service, assisted by Mr. Guinard, Administrator, and Mr. Revol, Assistant Chief of Bureau at the General Direction of Registration, Domain and Stamp.
The discussions were resumed on October 20 at ten o’clock and continued, with suitable intermission, until eight o’clock in the evening, an officer of the Embassy being present at all times.
Mr. King will, of course, make a detailed and technical report of the discussions to the Treasury Department, a copy of which will, it is understood, be made available to the State Department. The Embassy [Page 297] will, under the circumstances, refrain from a close review of the conferences, but the following observations may be of interest to the Department.
It was evident from the outset that the French were primarily interested, and very much interested, in the insertion of provisions, in the contemplated addendum to the existing convention or in a new convention to replace the present vehicle, which would establish administrative cooperation between the two countries in the exchange of fiscal information. In the course of the earlier discussions Mr. King and the Finance experts studied together, and point by point, the proposals for the addendum as drafted by the Treasury Department. The proposals of the French Government had apparently not been formulated, or, if so, they were at any rate not produced.
During the sessions of October 20 the officials of the Ministry of Finance invited analysis of the Franco-Swedish conventions of December 24, 1936, relating to double taxation and reciprocal assistance with regard to fiscal evasion.27 They seemed to favor the drafting of a new Franco-American convention along similar lines rather than an addendum to the existing convention, but it was evident that they would not press this point.
Mr. King found opportunity to bring up in a general way several pending claims which have arisen under the French law and decree of 1872, such as those against the Boston Blacking Company and the Durham Duplex Razor Company, as well as the Guaranty Trust Company “patente” tax case, and it appeared that it might be the disposition of the French Government to agree to dismiss these pending cases in the fabric of the proposed addendum or replace-convention in return for an acceptable “quid pro quo”. It was intimated that the French Government would propose that the withholding rate on dividends paid to nonresident French corporations be reduced from the present 10 per cent to 5 per cent, as in the case of Canada28 and as possible for other countries contiguous to the United States.
The officials of the Ministry of Finance indicated to Mr. King that the French draft proposals would be transmitted to the United States Government for consideration within a period of a few weeks.
Respectfully yours,
Counselor of Embassy
- Not printed.↩
- H. Merle Cochran, First Secretary of Embassy.↩
- Hugh S. Fullerton, First Secretary of Embassy.↩
- League of Nations Treaty Series, vol. clxxxxiv, p. 35.↩
- Article 1a of Convention Between the United States and Canada on Income Taxation, signed at Washington, December 30, 1936; for text, see Department of State Treaty Series No. 920, or 50 Stat. 1399; for correspondence, see Foreign Relations, 1936, vol. i, pp. 790 ff.↩