FROM THE OFFICE OF PUBLIC AFFAIRS

The Treasury Department announced today that State Department Deputy Assistant Secretary (Bureau of European Affairs) James I. Gadsden and Italian Ambassador Ferdinando Salleo signed a new income tax Treaty and Protocol between the United States and Italy at the State Department in Washington. The new Treaty and Protocol, if ratified, will replace the current Treaty and Protocol between the two countries that entered into force on December 20, 1985.

The proposed Treaty and Protocol generally follow 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 Tax Convention. As with all bilateral treaties, there are some variations. In the proposed Treaty and Protocol, these differences reflect particular aspects of Italian law and treaty policy, the interaction of U.S. and Italian law, and U.S.-Italy economic relations.

The proposed Treaty and Protocol are subject to ratification by each country, and will enter into force upon the exchange of instruments of ratification. The proposed Treaty and Protocol 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 of entry into force. With respect to other taxes, the proposed Treaty and Protocol will have effect with respect to taxable periods beginning on or after the first day of January next following the date of entry into force.

Copies of the proposed Treaty and Protocol will be available on the Internet at www.treas.gov/taxpolicy.