Orbitax

United States Tax News

US and Spain enter mutual agreement on treatment of LLCs, disregarded entities, and Sub-S corporations under treaty and protocol

9 April 2006

US Foreign Relations Committee approves protocols to income and capital, and estate, inheritance and gift, tax treaties between France and US

9 April 2006

US Foreign Relations Committee approves protocol to treaty between Sweden and US

9 April 2006

Ruling on taxability of non-residents with captive BPOs

9 April 2006

US

16 March 2006

US Senate hearings on protocol to treaty between Sweden and US

16 March 2006

Treaty negotiations – update

16 March 2006

Final regulations issued on classification of business entities organized in multiple jurisdictions

16 March 2006

The Competent Authorities of Canada and the United States have signed a memorandum of understanding (MOU) setting out the principles, guidelines and procedures to be followed in resolving factual disagreements in mutual agreement cases under the 1980 US-Canada income tax treaty. The MOU was signed on 23 December 2005 and follows the MOU signed on 3 June 2005 that formalized the mutual agreement procedure (MAP) for resolving cases of double taxation under the treaty. It also follows the announcement by the US Internal Revenue Service (IRS) and the Canada Revenue Agency (CRA) on 8 December 2005 that they had reached agreement on procedures for resolving factual disputes in the MAP process.

19 February 2006

US and Mexico sign revised mutual agreement on eligibility of fiscally transparent entities to claim treaty benefits

19 February 2006

The Competent Authorities of the United States and Japan have signed a memorandum of understanding (MOU) defining the term "investment bank" for purposes of Art. 11 (Interest) of the 2003 income tax treaty between the two countries. The definition is relevant for determining eligibility for zero-rate withholding for interest payments under Art. 11(3)(c)(i) of the 003 Japan-US Treaty. The MOU was signed on 27 December 2005 and released by the US Internal Revenue Service (IRS) on 28 December 2005.

19 February 2006

IRS updates procedure for APAs in transfer pricing cases

19 February 2006

US Court

19 February 2006

Following a reduction in withholding tax rates in the 2001 protocol to the Australia-US tax treaty, Australia is required under the most-favoured-nation clause in its existing treaty with Korea (Rep.) to renegotiate the 1982 Australia-Korea (Rep.) treaty.

19 February 2006

Indian ruling that US pension fund does not qualify for treaty benefits

19 February 2006

The US Tax Court has disallowed a deduction for a contribution to a French pension plan and payment of French real estate taxes. Isabelle Bichindaritz v. Commissioner of Internal Revenue (T.C. Memo 2005-298 dated 29 December 2005). The case involved a French citizen who was teaching at a US university. She claimed a deduction on her US tax return for a contribution to a French pension plan and also a deduction for the payment of French real estate taxes.

19 February 2006

Spanish Supreme Court examines refund of excess amounts withheld non-discrimination provision (US treaty)

1 January 2006

The amending protocol to the France-US income and capital tax treaty of 31 August 1994 4 were submitted to the French Parliament on 14 December 2005.

1 January 2006

Presidential tax reform panel issues final report

6 December 2005

On 23 November 2005, Sweden ratified the new protocol to the Sweden-United States Income Tax Treaty of 1 September 1994, signed on 30 September 2005, by way of Law SFS 1994:1617 published in the Svensk Frfattningssamling (official publication of statutes in Sweden).

6 December 2005

Details of the protocol signed by Sweden and the United States on 30 September 2005 to the Sweden-United States income tax treaty of 1 September 1994 have become available. The protocol provides for a zero withholding tax in respect of inter-company dividends. The application of the zero rate essentially requires that (i) the beneficial owner is a company resident of the other contracting state that has owned, directly or indirectly, through one or more residents of either contracting states, shares representing 80% or more of the voting power in the company paying the dividends for at least a 12-month period ending on the date on which the entitlement to the dividends is determined and (ii) certain conditions under the tax treaty's limitation-on-benefits clause are met. Under certain conditions, pension funds are also eligible for the zero rate.

9 November 2005

On 30 September 2005 Sweden and the United States signed a protocol to the Sweden-United states income tax treaty of 1 September 1994. Further details of the protocol will be reported subsequently.

16 October 2005

Final and proposed regulations issued on taxation of earnings of CFCs

16 October 2005

US and Mexico reach mutual agreement on eligibility of fiscally transparent entities to claim treaty benefits

16 October 2005

The Internal Revenue Service (IRS) has released the text of a private letter ruling (PLR) on 3 June 2005 holding that stock of a US corporation owned by a UK company through foreign entities that elect to be treated as disregarded entities under the US check-the-box regulations can qualify for the zero dividend withholding rate under

3 August 2005

The Netherlands State Secretary for Finance published Decree IFZ2005/546M on 6 July 2006 concerning the application of the 1992 income tax treaty between The Netherlands-United States to hybrid entities.

3 August 2005

The protocol of 8 March 2004 to the 1992 income tax treaty between the United States and the Netherlands entered into force on 28 December 2004. The protocol will generally be effective for taxable periods beginning on or after 1 January 2005, and the provisions of the protocol relating to withholding taxes will be effective for amounts paid or credited on or after 1 February 2005. Persons that were entitled to greater benefits under the US-Netherlands treaty before it was modified by the protocol of 8 March 2004 may elect for the application of the old provisions for a period of 12 months from the date on which the protocol provisions became effective.

19 January 2005

The US Treasury Department has announced that the protocol to the 1984 income tax treaty between the United States and Barbados, signed on 14 July 2004, entered into force on 20 December 2004. According to the Treasury Department announcement, the protocol will generally effective for taxable years beginning on or after 1 January 2005, and the provisions of the protocol relating to withholding taxes applies for amounts paid or credited on or after 1 February 2005.

19 January 2005

The protocol has been ratified by both states but has not yet entered into force. However, it is expected that the exchange of ratification instruments will take place timely as a result of which the protocol will be effective as from 1 January 2005.

7 September 2004

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