New Income Tax Treaties for Estonia, Latvia, Lithuania and Venezuela 1/4/2000

The Treasury Department on Tuesday announced that new income tax treaties with the Republics of Estonia, Latvia, Lithuania and Venezuela entered into force on December 30. The four treaties, to which the U.S. Senate gave advice and consent to ratification in November, all represent new treaty relationships for the United States.

On December 30, the United States notified Estonia, Latvia and Lithuania that the U.S. had complied with the constitutional requirements for entry into force of the bilateral income tax treaty between the United States and each of them. Each of the countries had previously provided reciprocal notifications to the United States and, accordingly, the treaties entered into force on December 30. The treaties apply, with respect to taxes withheld at source, in respect of amounts paid or credited on or after January 1, 2000 and, with regard to other taxes, in respect of taxable years beginning on or after January 1, 2000.

Also on December 30, the United States and Venezuela notified each other of the completion of required procedures for entry into

Article 20: Students, Trainees and Researchers
Under the proposed treaty, a resident of one country who visits the other country (the host country) for the primary purpose of studying at a university or other accredited educational institution, securing training in a professional specialty, or studying or doing research as the recipient of a grant from a governmental, religious, charitable, scientific, literary, or educational organization will be exempt from tax in the host country with respect to certain items of income for a period not exceeding five years from the date of arrival in the host country. The items of income that are eligible for exemption from host country taxation are: (1) payments from abroad for maintenance, education, study, research, or training; (2) grants, allowances, or awards; and (3) income from personal services performed in the other country to the extent of $5,000, or its equivalent in Latvian lats.

Under the proposed treaty, an individual resident of one country who visits the other country as an employee of, or under contract with, a resident of the first country for the primary purpose of acquiring technical, professional, or business experience from a person other than his employer or studying at a university or other accredited educational institution in the other country is exempt from tax by the other country for a period of 12 consecutive months on compensation for personal services in an aggregate amount not exceeding $8,000 or its equivalent in Latvian lats.

Under the proposed treaty, an individual resident of one country who is temporarily present in the other country for a period not exceeding one year, as a participant in a program sponsored by the Government of the other country, for the primary purpose of training, research, or study is exempt from tax by the other country on compensation for personal services performed in the other country in respect of such training, research, or study, in an aggregate amount not exceeding $10,000 or its equivalent in Latvian lats.

The proposed treaty provides that this article does not apply to income from research undertaken not in the public interest, but primarily for the private benefit of a specific person or persons.

This article of the proposed treaty is an exception from the saving clause in the case of persons who are neither citizens nor lawful permanent residents of the host country.

Explanation of Lithuania Treaty for Students, Trainees and Researchers

Article 20: Students, Trainees and Researchers
Under the proposed treaty, a resident of one country who visits the other country (the host country) for the primary purpose of studying at a university or other accredited educational institution, securing training in a professional specialty, or studying or doing research as the recipient of a grant from a governmental, religious, charitable, scientific, literary, or educational organization will be exempt from tax in the host country with respect to certain items of income for a period not exceeding five years from the date of arrival in the host country. The items of income that are eligible for exemption from host country taxation are: (1) payments from abroad for maintenance, education, study, research, or training; (2) grants, allowances, or awards; and (3) income from personal services performed in the other country to the extent of $5,000, or its equivalent in Lithuanian litas.

Under the proposed treaty, an individual resident of one country who visits the other country as an employee of, or under contract with, a resident of the first country for the primary purpose of acquiring technical, professional, or business experience from a person other than his employer or studying at a university or other accredited educational institution in the other country is exempt from tax by the other country for a period of 12 consecutive months on compensation for personal services in an aggregate amount not exceeding $8,000 or its equivalent in Lithuanian litas.

Under the proposed treaty, an individual resident of one country who is temporarily present in the other country for a period not exceeding one year, as a participant in a program sponsored by the Government of the other country, for the primary purpose of training, research, or study is exempt from tax by the other country on compensation for personal services performed in the other country in respect of such training, research, or study, in an aggregate amount not exceeding $10,000 or its equivalent in Lithuanian litas.

The proposed treaty provides that this article does not apply to income from research undertaken not in the public interest, but primarily for the private benefit of a specific person or persons. This article of the proposed treaty is an exception from the saving clause in the case of persons who are neither citizens nor lawful permanent residents of the host country.

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