[Senate Treaty Document 106-13]
[From the U.S. Government Publishing Office]
106th Congress
1st Session SENATE Treaty Doc.
106-13
_______________________________________________________________________
PROTOCOL AMENDING THE TAX CONVENTION WITH GERMANY
__________
MESSAGE
from
THE PRESIDENT OF THE UNITED STATES
Transmitting
PROTOCOL AMENDING THE CONVENTION BETWEEN THE UNITED STATES OF AMERICA
AND THE FEDERAL REPUBLIC OF GERMANY FOR THE AVOIDANCE OF DOUBLE
TAXATION WITH RESPECT TO TAXES ON ESTATES, INHERITANCES, AND GIFTS
SIGNED AT BONN ON DECEMBER 3, 1980, SIGNED AT WASHINGTON, DECEMBER 14,
1998
September 21, 1999.--Protocol was read the first time, and together
with the accompanying papers, referred to the Committee on Foreign
Relations and ordered to be printed for the use of the Senate
______
U.S. GOVERNMENT PRINTING OFFICE
69-112 WASHINGTON : 1999
LETTER OF TRANSMITTAL
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The White House, September 21, 1999.
To the Senate of the United States:
I transmit herewith for Senate advice and consent to
ratification the Protocol Amending the Convention Between the
United States of America and the Federal Republic of Germany
for the Avoidance of Double Taxation with Respect to Taxes on
Estates, Inheritances, and Gifts signed at Bonn on December 3,
1980, signed at Washington, December 14, 1998. The Protocol
provides a pro rata unified tax credit to the estate of a
German domiciliary for purposes of computing U.S. estate tax.
It allows a limited U.S. ``marital deduction'' for certain
estates of limited value if the surviving spouse is not a U.S.
citizen. In addition, the Protocol expands the United States
jurisdiction to tax its citizens and certain former citizens
and long-term residents and makes other changes to the treaty
to more closely reflect current U.S. treaty policy.
I recommend that the Senate give early and favorable
consideration to this Protocol and give its advice and consent
to ratification.
William J. Clinton.
LETTER OF SUBMITTAL
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Department of State,
Washington, September 2, 1999.
The President,
The White House.
The President: I have the honor to submit to you, with a
view to its transmission to the Senate for advise and consent
to ratification, the Protocol Amending the Convention Between
the United States of America and the Federal Republic of
Germany for the Avoidance of Double Taxation with Respect to
Taxes on Estates, Inheritances, and Gifts, Signed at Bonn,
December 3, 1980, signed at Washington, December 14, 1998
(``the proposed Protocol'').
The proposed Protocol modifies the tax treatment of certain
transfers of property by gift or upon death. The Protocol
provides a pro rata unified tax credit to the estate of a
German domiciliary for purposes of computing U.S. estate tax.
It allows a limited U.S. ``marital deduction'' for certain
estates of limited value if the surviving spouse is not a U.S.
citizen. In addition, the Protocol expands the United States'
jurisdiction to tax its citizens and certain former citizens
and long-term residents and makes other changes to the treaty
to more closely reflect current U.S. treaty policy.
Article 1 of the proposed Protocol replaces subparagraph
3.c) of Article 4 of the Convention, which addresses fiscal
domicile. The revised provision extends, from five to ten
years, the period of time during which a citizen of one state
can be domiciled in the other state without becoming subject to
the primary taxing jurisdiction of the other state.
Article 2 amends paragraph 4 of Article 10 of the
Convention, which addresses deductions and exemptions. The
Convention gives the spouse of a decedent or donor of one state
a 50-percent exemption for property subject to tax in the other
state. The proposed Protocol provides that the United States
need not provide this exemption if the decedent was a U.S.
citizen or was a former U.S. citizen or long-term resident who
lost his or her citizenship or residency status for tax-
avoidance reasons.
Article 3 of the proposed Protocol adds paragraphs 5 and 6
to Article 10 of the Convention, which deals with deductions
and exemptions from estate, inheritance, and gift taxes.
Paragraph 5 provides a pro rata unified credit to the estate of
a German domiciliary for purposes of computing the U.S. estate
tax. Under this provision, a German domiciliary is allowed a
credit against U.S. estate tax ranging from the amount
ordinarily allowed to the estate of a nonresident under the
Internal Revenue Code ($13,000) to the amount of credit allowed
to the estate of a U.S. citizen under the Internal Revenue Code
($211,300 in 1999), based on the extent to which the assets of
the estate are situated in the United States.
Paragraph 6 provides a U.S. estate tax marital deduction up
to the Internal Revenue Code's applicable exclusion amount
($650,000 in 1999) when the surviving spouse is not a U.S.
citizen. Certain 1988 changes in U.S. law deny a marital
deduction when the surviving spouse is not a U.S. citizen. This
provision is intended to provide relief from these changes in
the case of estates of limited value.
Article 4 of the proposed Protocol replaces paragraph 1 of
Article 11 of the Convention, which deals with credits. The
revised provisions expands the description of persons who may
be taxed by the United States to allow the United States to
apply its estate and gift tax provisions to former citizens and
long-term residents who lost their status as such for tax-
avoidance reasons.
The Department of the Treasury and the Department of State
cooperated in the negotiation of the proposed Protocol. It has
the full approval of both Departments.
Respectfully submitted,
Strobe Talbott.