FROM THE OFFICE OF PUBLIC AFFAIRS

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I would like to thank you all for being here today at this important ceremony.  I would like to welcome our friends from the Netherlands, especially State Secretary for Finance Joop Wijn who traveled here from The Hague in order to join me in signing this new agreement with respect to the tax treaty between our two countries.

This Administration has made a strong commitment to our income tax treaty program.  Tax treaties are a key element of the overall international economic policy of the United States because they serve to reduce tax barriers to international trade and investment.

The new agreement that we are signing today is just the latest chapter in a long history of close relations between the United States and the Netherlands.  Our history with the Dutch goes back to our earliest days, to the founding of our nation.  The economic ties between our two countries are long-standing and deep, cutting across all sectors of the economy. 

It is hard to imagine a country that is more outwardly-focused than the Netherlands.  As a result, the Netherlands has been an international leader in bringing down barriers to cross-border trade and investment.  The first tax-related agreement between our two countries was a shipping agreement that entered into force in 1926.  Since that time we have entered into a series of tax treaties and protocols, each of which has helped further improve the environment for international trade and investment. 

We also should not lose sight of the fact that the current tax treaty between the United States and the Netherlands, now just over a decade old, included groundbreaking provisions designed to prevent the inappropriate exploitation of the treaty by those who are not bona fide residents of one of our two countries.  Those provisions have served as a model for our other tax treaties.  Indeed, the early agreement with the Netherlands on these anti-treaty-shopping provisions was key to our success in incorporating such provisions in all of our modern tax treaties.

Today’s agreement includes important improvements in the current U.S.-Netherlands tax treaty.

• The Protocol modernizes the provisions preventing inappropriate exploitation of the treaty to take into account economic developments and changes in treaty practices over the past decade.  The new rules are simpler, clearer and more effective.

• The Protocol provides for exclusive residence-country taxation of certain intercompany dividends.  This elimination of withholding taxes removes a remaining barrier to investment between our two countries in both directions.

• The Protocol provides clear rules regarding the treatment of investments made through partnerships, allowing flexibility in business form.

• The Protocol further coordinates the two countries’ tax rules relating to pensions, allowing individuals to take up employment opportunities in either country without concerns about unintended tax effects on their retirement benefits.

The economic relationship between the United States and the Netherlands is a reciprocal one.  The Netherlands is both an important source of inbound investment in the United States and an important destination for outbound investment from the United States.  I am pleased to sign this agreement today that will foster even closer economic relations.  I look forward to the benefits it will bring to both of our countries.

Related Documents:

• Protocol
• Final Exchange of Notes