FROM THE OFFICE OF PUBLIC AFFAIRS

The Treasury Department announced Thursday that Assistant Secretary for Tax Policy Donald C. Lubick and Danish Chargé daffaires Lars Møller signed a new income tax Treaty between the United States and Denmark at the State Department in Washington. This tax Treaty, if ratified, will replace the current Treaty that entered into force on December 1, 1948, and will represent an important step toward achieving Treasurys goal of updating the United States existing tax treaty network.

In its provisions for the elimination of double taxation and for mutual cooperation in tax matters, the new treaty adopts the international norms that were developed after the implementation of the current treaty more than 50 years ago, said Assistant Secretary for Tax Policy, Donald C. Lubick.

The proposed Treaty with Denmark generally follows the format of the 1996 U.S. Model Tax Convention, while incorporating some provisions found in recent U.S. treaties with other developed countries and in the Organization for Economic Cooperation and Development (OECD) Model. There are, as with all bilateral tax treaties, some variations from these norms. In the proposed Treaty, these differences reflect particular aspects of Danish law and treaty policy, the interaction of U.S. and Danish law, and U.S.-Denmark economic relations.

Denmark and the United States are required to notify each other when the requirements for the entry into force of the proposed Treaty have been complied with. The proposed Treaty will enter into force upon the receipt of the later of these notifications. It will have effect, with respect to taxes withheld at the source, for amounts paid or credited on or after the first day of the second month following the date the treaty enters into force. With respect to other taxes, the proposed Treaty will have effect with respect to taxable periods beginning on or after the first day of January next following the date on which the Treaty enters into force.

Copies of the new Treaty are available on the Internet at www.treas.gov/taxpolicy.