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d cz <z <z c c: c c c: C n j> j> j> ^ ^> j> -? n n n ft ft ri r\ n n ri / in /\ ft n ft n ft ft U v v u v v v v v v J v v v v v l v v v v V J v v v V v v v TAX CONSIDERATIONS ON PROPERTY RIGHTS ABROAD r\fifvrvAf\f\f\f\f\nif\njPvf\ U U u u u v (\ u u rir\r\r\rirvr\rir\rvftrvrvftf' u by Walter H. Diamond A MERICAN BUSINESSMEN are frequently startled by the impressive number of large and small companies, amounting to some 2,500, that have made direct investments abroad since 1960. During the past five years more than 2,000 United States firms have established businesses in Europe alone. Although little publicity is focused on the vast quantity of license agreements arranged with foreign companies, surveys show that they outnumber new overseas investments by nearly three to one. Take the case of France since de Gaulle came to power. While approximately 350 American businesses were setting up French distributing centers for the European Common Market, another 1,000 U.S. firms were negotiating license pacts for patents, trademarks, copyrights, designs, technical services, certain types of rentals and trade secrets and formulae. In Australia the 850 so-called American investors actually consist of only 250 companies laying out funds for capital investments but with 600 firms operating through licensees. Of course there are numerous reasons why license arrangements often gain precedence over direct investments. Nevertheless, by far the majority of companies are quick to admit that the much lower royalty tax on patents, trademarks and other services over corporate rates is the prime incentive for their decision. Generally speaking, the easiest way for an American company to find the country which will levy the lowest royalty tax on its foreign property rights is to follow the line of least resistance — the Income Tax Convention. This is why the six nations of the European Economic Community offer the most receptive conditions for licensing of U.S. property rights of any other area in the world. For instance, under the double taxation treaty between the United States and the Netherlands, the normal Dutch tax of 15 per cent on royalties does not apply on United States residents, corporations or other legal entities providing that the recipients do not carry on business in the Netherlands through a permanent establishment. The same basic exemption on royalties from patents, 32 THE QUARTERLY
Object Description
Title |
Tax considerations on property rights abroad |
Author |
Diamond, Walter H. |
Subject |
Investments, Foreign -- Taxation Double taxation -- United States -- Treaties |
Personal Name |
Diamond, Walter H. |
Portrait |
Diamond, Walter H. |
Citation |
Quarterly, Vol. 10, no. 2 (1964, June), p. 32-40 |
Date-Issued | 1964 |
Source | Originally published by: Touche, Ross, Bailey & Smart |
Rights | Copyright and permission to republish held by: Deloitte |
Type | Text |
Format | PDF image with OCR under text, scanned at 400dpi |
Collection | Deloitte Digital Collection |
Digital Publisher | University of Mississippi. Digital Accounting Collection |
Date-Digitally Created | 2009 |
Language | eng |
Identifier | Quarterly_1964_June-p32-40 |