TREATY BETWEEN FINANCE THE UNITED STATES AND FRANCE CONCERNING On April 27, 1932, M. André Tardieu, President of the Council of Ministers of France, Minister for Foreign Affairs, and Mr. Walter E. Edge, American Ambassador to France, signed on behalf of France and the United States a treaty for the purpose of settling certain questions relative to double taxation. Except in case of a few countries which have special arrangements with France, business concerns of other countries, operating in France through French subsidiary corporations, are subjected to a tax known as the double dividend tax. The profits of the subsidiary corporation are first subjected to an ordinary corporation tax of 15 per cent and also to a 16 per cent distribution tax (the tax on income from securities) on all dividends paid by the subsidiary to the parent company. In the case of a foreign parent company, the French administration in addition to the above two taxes has assessed on some foreign subsidiary corporations a second dividend tax of 16 per cent upon a portion (quotité imposable) of the dividends distributed by the parent company, apparently upon the theory that dividends distributed by the parent company consist in part of profits realized in France. This quota is usually based upon the ratio of the assets of the French subsidiary to the total assets of the parent corporation. Cases involving assessments against some foreign companies of this second dividend tax have been pending in the French courts. In the case of an unincorporated branch of a foreign corporation, the French law imposes (in addition to the 15 per cent profits tax) a dividend tax upon a share of the quota of the dividends paid by the foreign corporation. This tax is usually based upon the ratio of the French assets to the total assets of the foreign corpora tion. There necessarily results uncertainty as regards the ratio, together with the requirement of examining the books and records. of the foreign corporation. Under the treaty just signed, American corporations which control French subsidiaries are given the option of staying under the present law or of agreeing to pay in lieu of the quotité imposable a tax on "diverted profits." The tax on diverted profits is applicable only in case the intercompany arrangements between the French subsidiary and the American parent are such as to leave with the American parent corporation profits which are properly allocable to the French subsidiary. The profits so diverted will be subject to the profits tax of 15 per cent and to the dividend tax of 16 per cent. When the option is exercised, the quota applicable to the American parent company will be abandoned. In the case of a branch, a similar option is given under which the quotité imposable will be abandoned and in lieu thereof 75 per cent of the profits of the branch subjected to the dividend tax. CONVENTIONS OF THE SECOND SESSION OF THE INTERNATIONAL CONFERENCE FOR THE UNIFICATION OF LAWS ON BILLS OF EXCHANGE, PROMISSORY NOTES, AND CHEQUES Nicaragua 6 According to a circular letter dated April 7, 1932, from the League of Nations, there was deposited on March 16, 1932, the instrument of adherence of Nicaragua to the following conventions and protocols which were adopted at the International Conference for the Unification of Laws on Bills of Exchange, Promissory Notes, and Cheques, at its second session March 19, 1931: 1. Convention and protocol providing a uniform law for cheques; 2. Convention and protocol for the settlement of certain conflicts of laws in connection with cheques; 3. Convention and protocol on stamp laws in connection with cheques. GRECO-BULGARIAN DEBT AGREEMENTS ADVISORY OPINION OF THE PERMANENT COURT OF INTERNATIONAL JUSTICE IN REGARD TO THE AGREEMENT OF DECEMBER 9, 1927 7 Under the treaty of Neuilly, which terminated the World War in respect of Bulgaria, provision was made in article 121 for the payment of reparations by that country. The details governing the 9 "See Bulletins No. 25, October, 1931, p. 17, and No. 29, February, 1932, p. 15. T XXIV Sess., Series A./B., No. 45. See American Journal of International Law, vol. 14, p. 185. payment of these reparations were settled by the agreement of The Hague, dated January 20, 1930, and a trust agreement dated March 5, 1931. The share of Greece includes about three-fourths of the reparations payments. Under a convention 10 between Greece and Bulgaria signed at Neuilly November 27, 1919, in pursuance of article 56 of the treaty of Neuilly, signed the same day, certain provisions were included under which the two countries became obligated to compensate emigrants from their respective territories into the territories of the other. The balance of these liabilities, events proved, was in favor of Bulgaria, and Greece made periodical payments. Emigration payments were the subject of regulation by an agreement, commonly known as the Caphandaris-Molloff Agreement, arrived at by Greece and Bulgaria on December 9, 1927,11 article 8 of which provides: Any differences as to the interpretation of this agreement shall be settled by the Council of the League of Nations, which shall decide by majority vote. On June 20, 1931, the President of the United States proposed a moratorium on intergovernmental debts.12 In accepting this moratorium, Greece expressly stipulated that, if it should forego reparation payments, Bulgaria should correspondingly forego emigration payments. When the Greek Government failed to pay over to the Bulgarian Government the amount of emigration debt due July 31, 1931, the latter, claiming that the moratorium on reparation payments did not affect the obligation of the Greek Government to pay the other debt, brought the matter before the Council of the League of Nations, citing article 8 of the agreement of December 9, 1927. The Council of the League, acting in accordance with article 14 of the Covenant of the League of Nations,13 thereupon asked the Permanent Court of International Justice to give an advisory opinion on the following points: In the case at issue, is there a dispute between Greece and Bulgaria within the meaning of Article 8 of the CaphandarisMolloff Agreement concluded at Geneva on December 9th, 1927? If so, what is the nature of the pecuniary obligations arising out of this Agreement? The Court, on March 8, 1932, handed down its opinion, answering the first question in the negative. It considered itself unauthorized to answer the second. The opinion was concurred in by eight judges; six judges dissented. 10 For text, see British State Papers, Misc. No. 3, 1920, Cmd. 589. 11 For text, see League of Nations Treaty Series, vol. 87, p. 201. 12 For text, see Press Releases, Weekly Issue No. 91, June 27, 1931, pp. 481483. See also Bulletin No. 22, July, 1931, p. 22. 13 For text, see Treaties, Conventions, etc., vol. III, p. 3154. The Court observed that the right of Greece to make its acceptance of the Hoover moratorium conditional, had nothing to do with the agreement of December 9, 1927. On the other hand, the GreekGovernment in contending that the emigration debt was of the same. nature as the reparation debt, raised a question which could not be decided without referring to the emigration agreements between the two countries. In that case, assuming that it was the agreement of December 9, 1927, which was to be interpreted, the interpretation would be solely for the purpose of ascertaining whether the Greek debt could come within one or other of the categories covered by the Hoover moratorium, which amounted to a statement that the interpretation of the agreement would be incidental only to an interpretation of the moratorium. The powers of the Council under article 8 of the agreement of December 9, 1927, were limited to the interpretation of that agreement and would not extend to the interpretation of the moratorium. Accordingly, within the meaning of article 8 of the agreement of December 9, 1927, there was no dispute before the Council between the two countries. During the proceedings before the Court, the two Governments concerned indicated a desire that the Court should give an opinion upon the second question submitted to it whether the first was or was not answered in the affirmative. In regard to this the Court said: By the terms of Article 14 of the Covenant, the right to submit a question to the advisory jurisdiction of the Court is given only to the Assembly and to the Council of the League. The Court is therefore bound by the terms of the questions as formulated in this case by the Council. The second question is so worded as to be put to the Court conditionally upon an affirmative answer being given to the first question. To ignore this condition at the request of the Parties would be in effect to allow the two interested Governments to submit a question for the advisory opinion of the Court. As the wishes expressed by the respective Agents and Counsel contemplated only an extension of the advisory procedure, there is no need for the Court to consider whether it is possible for an understanding between the representatives of the interested Governments, reached in the course of the proceedings, to serve as a kind of "special agreement ", initiating a contentious proceeding before the Court. NAVIGATION ARRANGEMENTS FOR THE RECIPROCAL RECOGNITION OF LOAD-LINE CERTIFICATES BETWEEN THE UNITED STATES AND DENMARK, GERMANY, AND ICELAND By exchanges of notes dated January 16, 1932, September 11 and December 16, 1931, and January 16, 1932, provisional agreements were entered into between the United States and Denmark, Germany, and Iceland, respectively, for the reciprocal recognition of load-line certificates for merchant vessels. These agreements, effective as of January 16, 1932, December 16, 1931, and January 16, 1932, respectively, will remain in effect pending the coming into force in the respective countries of the international load-line convention of July 5, 1930.14 The agreements have been printed as Executive Agreement Series, Nos. 29, 31, and 30. RADIO INTERNATIONAL RADIO CONVENTION Dominican Republic By a communication dated April 9, 1932, the Minister of the Dominican Republic at Washington transmitted to the Secretary of State the instrument of ratification of his Government of the international radio convention signed at Washington November 25, 1927, and the general and supplementary regulations pertaining thereto, signed on the same day. The ratification became effective as of April 9, 1932, the date on which it was received at the Department of State. Lithuania VISA FEES An agreement effected by an exchange of notes has been entered into between the United States and Lithuania for the reciprocal reduction of visa fees. The agreement, effective April 15, 1932, provides that on and after that date a fee of $5 will be applied to all nonimmigrant visas. Transit visas will be granted gratuitously upon a reciprocal basis, and, as respects Lithuania, include the right to sojourn four days in that country. CHANGES TO BE NOTED IN THE LIST OF ECONOMIC TREATIES OF THE UNITED STATES On page 78 of the Third Supplement of the Bulletin of Treaty Information, August, 1929, there should be added to the list of countries with which agreements for the reciprocal waiver of visa fees have been concluded the following: Lithuania____ March 11, 1932. April 15, 1932 On page 57 of the Third Supplement of the Bulletin of Treaty Information, August, 1929. there should be added, under the heading "Finance", the following: Bipartite Treaties Signed but not in Force France: Treaty Concerning Double Taxation "See Bulletin No. 30, March, 1932, p. 15. |