Recent Income Tax Treaty Changes

Originally published June 2005

The U.S. is now participating in a new income tax treaty with Japan that replaces a treaty executed in 1971. In addition, the U.S. and Netherlands have executed a protocol to the existing 1992 income tax treaty and 1993 protocol. The highlights of both the new treaty with Japan and the Dutch protocol are set forth below.

The new treaty (the Treaty) substantially reduces withholding taxes on dividends, interest, and royalties in certain situations. These reductions went into effect on July 1, 2004. Please note that, to take advantage of the provisions in the new treaty, a U.S. person must submit certification of U.S. residency to the Japanese payor in addition to completing certain other applications depending on the type of income at issue.