Tax
Insights

Treasury Announces Entry Into Force Dates for Two Tax Treaty Protocols

 

On August 30, 2019, the Department of the Treasury announced the entry into force dates of protocols amending tax treaties with Japan and Spain. These protocols, along with protocols amending tax treaties with Luxembourg and Switzerland, were ratified by the Senate earlier this year.  
 
The protocol to the 2003 tax treaty between Japan and the United States reduces withholding tax rates on interest and certain dividends. It also provides for mandatory binding arbitration to facilitate more effective and expedient resolutions of certain tax disputes between U.S. and Japanese tax administrations, resulting in certainty for taxpayers. This protocol entered into force on August 30, 2019, upon the exchange of instruments of ratification in Tokyo.
 
The protocol to the 1990 tax treaty between Spain and the United States reduces withholding tax rates on interest, royalties, certain direct dividends, and capital gains. It also provides for mandatory binding arbitration to streamline dispute resolutions between the two countries’ tax administrations. This protocol will enter into force on November 27, 2019.
 
For effective dates of specific provisions within each of the protocols, taxpayers should refer to the specific agreements.

These tax treaty protocols are the first such updates to tax treaties in nearly 10 years and are intended to provide additional certainty for taxpayers conducting business in the United States and the treaty country partner

If you currently have business or are thinking of expanding to Spain or Japan, our international tax advisors can help you establish and manage your business abroad. Contact us to learn more.