811.512356 Double/24a
The Secretary of State to the Minister in the Netherlands (Gordon)
Sir: You are informed that the Treasury Department has expressed its interest in the negotiation with the Netherlands of a convention designed for the accomplishment of more effective administrative cooperation in the prevention of double taxation and the enforcement of revenue laws.
In the course of the study which has been given this matter it has been observed that there is in effect a tax convention between the Governments of the Netherlands and Belgium2 which, while broad in scope, contains no provision dealing with disclosure of information in the field of investment of movable capital income, this omission apparently being due to the fact that the laws of the contracting countries do not permit such disclosure.
While it is assumed that discussion of the question of exchange of information relating to income from movable capital is thus precluded, nevertheless in the event the Government of the Netherlands considers it practicable to extend the negotiations into that field this Government will be glad to include that problem in the proposed discussions. Even though that phase of the matter is eliminated it is believed that the convention between the Netherlands and Belgium, particularly the portions relating to permanent establishment and cooperation in tax enforcement, are sufficiently broad and are of sufficient mutual interest to form a basis of discussion between the two countries.
You are requested to approach the appropriate Netherland authorities for the purpose of ascertaining whether they are prepared at this time to engage in discussions with representatives of this Government with a view to the negotiation of a bilateral taxation convention. In the event that your representations meet with favorable [Page 608] response you may indicate that the Government of the United States would be glad to have the contemplated discussions held in Washington at such time as may be found to be mutually agreeable, and the Department will be pleased to receive an indication of the preference of the Netherland Government as to the time at which they might be scheduled.3
In presenting this matter to the Netherland authorities, you may inform them of the contents of this instruction.
It may be added that during the early part of 1937 discussions were held with the Government of the Netherlands through its Legation in Washington with respect to the negotiation of a multilateral convention involving the Netherlands, Italy, Switzerland, and the United States for the avoidance of double taxation upon enterprises of commerce and industry. At the request of the Treasury Department of this Government such negotiations were postponed because the pressure of other fiscal matters precluded at that time the study necessary for the negotiation of such an agreement. The Department has now learned informally that the Government of Italy is no longer interested in the proposed multilateral convention and that the Government of Switzerland is not concerned with a tax convention of the scope now under contemplation.
Very truly yours,