United States-Denmark Convention on Taxation and Fiscal Evasion Message to the Senate Transmitting the Convention.

To the Senate of the United States:

I transmit herewith, for Senate advice and consent to ratification, a Convention between the Government of the United States of America and the Government of the Kingdom of Denmark for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the Convention), together with a related exchange of notes, signed at Washington on June 17, 1980. I also transmit the report of the Department of State with respect to the Convention.

The Convention will replace the existing convention between the United States and Denmark, which has been in effect since 1948. It is similar to the United States model income tax convention published in May 1977, which takes into account the modernization of tax laws and conventions, but it retains certain provisions of the existing convention. For example, interest from investment and royalties continues to be exempt from withholding of tax at source.

In the new Convention, Denmark agrees to extend to United States shareholders in Danish corporations a dividend tax credit similar to that available to Danish shareholders; Denmark regards this as a major concession, in that the United States does not grant an analogous reciprocal credit.

In addition, the Convention contains a provision, at the request of the United States, that allows either country to tax capital gains derived by residents of the other country from the sale of real property located in the first country.

An exchange of notes clarifies some technical points.

I recommend that the Senate give early and favorable consideration to the Convention and its advice and consent to ratification.

JIMMY CARTER

The White House,

September 4, 1980.