[Senate Treaty Document 109-4]
[From the U.S. Government Publishing Office]
109th Congress
1st Session SENATE Treaty Doc.
109-4
_______________________________________________________________________
PROTOCOL AMENDING THE TAX CONVENTION WITH FRANCE
__________
MESSAGE
from
THE PRESIDENT OF THE UNITED STATES
TRANSMITTING
PROTOCOL AMENDING THE CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED
STATES OF AMERICA AND THE GOVERNMENT OF THE FRENCH REPUBLIC FOR THE
AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH
RESPECT TO TAXES ON INCOME AND CAPITAL, SIGNED AT PARIS ON AUGUST 31,
1994
September 28, 2005.--The Protocol was read the first time, and together
with the accompanying papers, referred to the Committee on Foreign
Relations and order to be printed for the use of the Senate
LETTER OF TRANSMITTAL
----------
The White House, September 28, 2005.
To the Senate of the United States:
With a view to receiving the advice and consent of the
Senate to ratification, I transmit herewith a Protocol Amending
the Convention Between the Government of the United States of
America and the Government of the French Republic for the
Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with Respect to Taxes on Income and Capital, signed at
Paris on August 31, 1994 (the ``Convention''), signed at
Washington on December 8, 2004 (the ``Protocol''). Also
transmitted for the information of the Senate is the report of
the Department of State with respect to the Protocol.
The Protocol was negotiated to address certain technical
issues that have arisen since the Convention entered into
force. The Protocol was concluded in recognition of the
importance of U.S. economic relations with France.
The Protocol clarifies the treatment of investments made in
France by U.S. investors through partnerships located in the
United States, France, or third countries. It also modifies the
provisions of the treaty dealing with pensions and pension
contributions in order to achieve parity given the two
countries' fundamentally different pension systems. The
Protocol makes other changes to the Convention to reflect more
closely current U.S. tax treaty policy.
I recommend that the Senate give early and favorable
consideration to this Protocol and that the Senate give its
advice and consent to ratification.
George W. Bush.
LETTER OF SUBMITTAL
----------
Department of State,
Washington, September 2, 2005.
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 advice and consent
to ratification, a Protocol Amending the Convention Between the
Government of the United States of America and the Government
of the French Republic for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with Respect to Taxes on
Income and Capital, signed at Paris on August 31, 1994 (the
``Convention''), and signed at Washington December 8, 2004 (the
``Protocol'').
The Protocol was negotiated to address certain technical
issues that have arisen since the Convention entered into
force. The Protocol was concluded in recognition of the
importance of the United States' economic relations with
France.
The Protocol clarifies the treatment of investments made in
France by U.S. investors through partnerships located in the
United States, France, or third countries. Since France taxes
French partnerships on their worldwide income and does not
treat them as fiscally transparent, the Protocol confirms that
France maintains taxing rights with respect to French
partnerships. However, the Protocol provides that French treaty
benefits will apply to U.S. residents who invest through U.S.
partnerships or partnerships located in certain third
countries. These partnership provisions will eliminate
uncertainty and provide significant benefits to U.S. investors.
The Protocol modifies the provisions of the treaty dealing
with pensions and pension contributions in order to achieve
parity given the two countries' fundamentally different pension
systems. Under the Protocol, the country of source is assigned
taxing rights with respect to both state social security
payments and private pension payments. The Protocol also
includes a provision that allows U.S. persons to deduct
voluntary contributions to the French social security system to
the same extent that contributions to a U.S. plan would be
deductible, which is comparable to the provision in the
Convention that allows French residents deductions for
contributions to U.S. private pension plans.
The Protocol makes other changes to the Convention to
reflect more closely current U.S. tax treaty policy. The
Protocol updates the treatment of dividends paid by U.S. real
estate investment trusts to reflect a change in approach
adopted in1997, which is intended to prevent the use of
structures designed to avoid U.S. withholding taxes on outbound
dividends while providing appropriate benefits to portfolio investors
in such trusts. The Protocol also extends the provision in the
Convention preserving U.S. taxing rights with respect to certain former
citizens to cover certain former long-term residents.
The United States and France will notify each other when
their respective constitutional and legislative requirements
for entry into force of the Protocol have been satisfied. The
Protocol will enter into force on the date of receipt of the
later of such notifications. In general, it will have effect
with respect to taxes withheld at source, for amounts paid or
credited on or after the first day of the second month
following the date on which the Protocol enters into force, and
with respect to other taxes, for taxable periods beginning on
or after the first day of January following entry into force.
However, the rules benefiting U.S. residents investing through
partnerships will be applicable as of the effective dates of
the Convention.
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,
Condoleezza Rice.