Protocol Amending Tax Convention with LuxembourgSenate Consideration of Treaty Document 111-8
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[Senate Treaty Document 111-8] [From the U.S. Government Publishing Office] 111th Congress Treaty Doc. SENATE 2d Session 111-8 _______________________________________________________________________ PROTOCOL AMENDING TAX CONVENTION WITH LUXEMBOURG __________ 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 GRAND DUCHY OF LUXEMBOURG FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL, SIGNED ON MAY 20, 2009, AT LUXEMBOURG (THE ``PROPOSED PROTOCOL'') AND A RELATED AGREEMENT EFFECTED BY THE EXCHANGE OF NOTES ALSO SIGNED ON MAY 20, 2009 November 15, 2010.--Treaty 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 LETTER OF TRANSMITTAL ---------- The White House, November 15, 2010. To the Senate of the United States: I transmit herewith, for the advice and consent of the Senate to its ratification, the Protocol Amending the Convention between the Government of the United States of America and the Government of the Grand Duchy of Luxembourg for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, signed on May 20, 2009, at Luxembourg (the ``proposed Protocol'') and a related agreement effected by the exchange of notes also signed on May 20, 2009. I also transmit for the information of the Senate the report of the Department of State, which includes an Overview of the proposed Protocol and related agreement. The proposed Protocol and related agreement provide for more robust exchange of information between tax authorities in the two countries to facilitate the administration of each country's tax laws. They generally follow the current U.S. Model Income Tax Convention and the Organization for Economic Cooperation and Development standards for exchange of tax information. I recommend that the Senate give early and favorable consideration to the proposed Protocol and related agreement and give its advice and consent to their ratification. Barack Obama. LETTER OF SUBMITTAL ---------- Department of State, Washington, August 3, 2010. The President, The White House. The President: I have the honor to submit to you, with a view to their transmission to the Senate for advice and consent to ratification, the Protocol Amending the Convention between the Government of the United States of America and the Government of the Grand Duchy of Luxembourg for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, signed on May 20, 2009, at Luxembourg (the ``proposed Protocol'') together with a related agreement effected by exchange of notes also signed on May 20, 2009. The proposed Protocol and related agreement were negotiated to bring the existing income tax Convention with Luxembourg (the ``existing Convention'') into closer conformity with current U.S. tax treaty policy regarding the exchange of tax information; and in recognition of the importance of the United States' economic relations with Luxembourg. I recommend that the proposed Protocol be transmitted to the Senate for its advice and consent to ratification. The proposed Protocol and related agreement provide for more robust exchange of information between tax authorities in the two countries to facilitate the administration of each country's tax laws. They generally follow the current U.S. Model Income Tax Convention and the Organization for Economic Cooperation and Development standards for exchange of information. An overview of key provisions of the proposed Protocol is enclosed with this report. The proposed Protocol is self-executing. The Department of the Treasury and the Department of State cooperated in the negotiation of the proposed Protocol and related agreement, and the Department of the Treasury joins the Department of State in recommending that the proposed Protocol and related agreement be transmitted to the Senate as soon as possible for its advice and consent to ratification. Respectfully submitted. Hillary Rodham Clinton. Enclosures: As stated. OVERVIEW The proposed Protocol to amend the income tax Convention with Luxembourg (proposed Protocol) and the related agreement effected by exchange of notes were negotiated to bring the existing Convention, signed in 1996 (existing Convention), into closer conformity with current U.S. tax treaty policy regarding exchange of information. There are, as with all bilateral tax conventions, some minor variations from the language of the U.S. Model Income Tax Convention. In the proposed Protocol and related agreement, these minor differences reflect particular aspects of Luxembourg law and treaty policy. However, the proposed Protocol and related agreement generally follow the current U.S. Model Income Tax Convention and the Organization for Economic Cooperation and Development standards for exchange of tax information. Exchange of information The proposed Protocol replaces the existing Convention's tax information exchange provisions with updated rules that are consistent with current U.S. tax treaty practice. The proposed Protocol allows the tax authorities of each country to exchange information relevant to carrying out the provisions of the agreement or the domestic tax laws of either country. Among other things, the proposed Protocol would allow the United States to obtain information from Luxembourg whether or not Luxembourg needs the information for its own tax purposes, and provides that requests for information cannot be declined solely because the information is held by a bank or other financial institution. The proposed related agreement effected by exchange of notes sets forth agreed understandings between the parties regarding the updated provisions on tax information exchange, including that: the United States and Luxembourg will ensure that their respective competent authorities have the authority to obtain and provide upon request information held by banks and other financial institutions and information regarding ownership of certain entities; and information shall be exchanged without regard to whether the conduct being investigated would be a crime under the laws of the requested State. Entry into force The proposed Protocol would enter into force once both the United States and Luxembourg have notified each other that their respective applicable procedures for ratification have been satisfied. It would have effect with respect to requests made on or after the date of entry into force with regard to tax years beginning on or after January 1, 2009. The related agreement effected by exchange of notes would enter into force on the date of entry into force of the proposed Protocol and would become an integral part of the Convention on that date.