Convention Signed at Helsinki September 21, 1989; 　　Transmitted by the President of the United States of America to the Senate February 5, 1990 　　　　　　(Treaty Doc. No.101-l1, 101st Cong., 2d Sess.); 　　Reported Favorably by the Senate Committee on Foreign Relations July 27, 1990 (S. Ex. Rept. 　　　　　　No.101-28, 101st Cong., 2d Sess.); 　　Advice and Consent to Ratification by the Senate September 18, 1990 　　Ratified by the President November 11, 1990; 　　Ratifications Exchanged at Washington November 30, 1990; 　　Proclaimed by the President February 8, 1991; 　　Entered into Force December 30, 1990. GENERAL EFFECTIVE DATE UNDER ARTICLE 28:1 JANUARY 1991 TABLE OF ARTICLES Article 1----------------------------------Personal Scope Article 2----------------------------------Taxes Covered Article 3----------------------------------General Definitions Article 4----------------------------------Residence Article 5----------------------------------Permanent Establishment Article 6----------------------------------Income from Immovable (Real) Property Article 7----------------------------------Business Profits Article 8----------------------------------Shipping and Air Transport Article 9----------------------------------Associated Enterprises Article 10---------------------------------Dividends Article 11---------------------------------Interest Article 12---------------------------------Royalties Article 13---------------------------------Gains Article 14---------------------------------Independent Personal Services Article 15---------------------------------Dependent Personal Services Article 16---------------------------------Limitation on Benefits Article 17---------------------------------Artistes and Sportsmen Article 18---------------------------------Pensions, Annuities, Alimony, and Child Support Article 19---------------------------------Government Service Article 20---------------------------------Students and Trainees Article 21---------------------------------Other Income Article 22---------------------------------Capital Article 23---------------------------------Elimination of Double Taxation Article 24---------------------------------Non-Discrimination Article 25---------------------------------Mutual Agreement Procedure Article 26---------------------------------Exchange of Information Article 27---------------------------------Members of Diplomatic Missions and Consular Posts Article 28---------------------------------Entry into Force Article 29---------------------------------Termination Letter of Submittal----------------------of 24 October, 1989 Letter of Transmittal--------------------of 5 February, 1990 Notes of Exchange----------------------21 September, 1989 The "Saving Clause"--------------------Paragraph 3 of Article 1 　　　　　　　　　　　　　　　MESSAGE 　　　　　　　　　　　　　　　FROM 　　　　　　　THE PRESIDENT OF THE UNITED STATES 　　　　　　　　　　　　　TRANSMITTING 　　THE CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED STATES OF 　　AMERICA AND THE GOVERNMENT OF THE REPUBLIC OF FINLAND 　　FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION 　　OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL, 　　SIGNED AT HELSINKI ON SEPTEMBER 21, 1989 　　　　　　　　　　　　LETTER OF SUBMITTAL 　　　　　　　　　　　　　　　　　　　　　　　DEPARTMENT OF STATE, 　　　　　　　　　　　　　　　　　　　　　　　Washington, October 24, 1989. The PRESIDENT, The White House. 　　THE PRESIDENT: I have the honor to submit to you, with a view to its transmission to the Senate for advice and consent to ratification, the Convention between the United States of America and Finland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital, signed at Helsinki on September 21, 1989. 　　The Convention would replace the existing income tax convention with Finland which was signed at Washington on March 6, 1970. An income tax convention was signed between the United States and Finland in 1986 but was not transmitted to the Senate because of the pendency of the tax reform legislation in the United States. The new Convention is based on the model income tax conventions published by the Organization for Economic Cooperation and Development in 1977 and by the United States Department of the Treasury in 1981. It also reflects changes in United States income tax law introduced by the Tax Reform Act of 1986, as well as changes in Finnish income tax law introduced by tax reform legislation in 1988. 　　The Convention would retain the rates of the existing convention for the taxation by a Contracting State of dividends paid by corporations resident in that State to residents of the other Contracting State. The rate would be 5 percent for dividends on direct investments and 15 percent for dividends on portfolio investments. Also retained would be the exemption from taxation by one Contracting State of interest paid by a resident of that State if paid to a resident of the other Contracting State. 　　In the case of royalties, however, the Convention would change the general rate of source state taxation. Under the existing convention, royalties derived and beneficially owned by a resident of one Contracting State and paid to a resident of the other Contracting State are exempt from taxation by the former State. Article 12 of the Convention would allow the Contracting State in which the royalties arise to tax such royalties (other than royalties with respect to literary, artistic or scientific works) up to a maximum rate of 5 percent. 　　Article 5 of the Convention continues the rule of the existing convention that a building site or　construction project will constitute a permanent establishment in a Contracting State only if it has a duration in that State of more than 12 months. In addition, Article 5 of the Convention specifically applies the 12-month limitation for purposes of determining whether an installation or drilling rig or ship used to explore for or exploit natural resources in a Contracting State constitutes a permanent establishment in that State. 　　The Convention also contains standard provisions dealing with business profits, income from shipping and air transport, personal services income, nondiscrimination, mutual assistance, and exchange of information. 　　In addition, the Convention includes an article limiting the benefits of the Convention to residents of the two Contracting States by preventing "treaty shopping" abuses. Other provisions of the Convention limit the benefits of the reduced withholding rates on dividends from pass-through entities such as a regulated investment company (RIC) or a real estate investment trust (REIT), provide for the exchange of tax information, and authorize the General Accounting Office and appropriate Congressional committees to obtain certain tax information relevant to their function of overseeing the administration of the United States tax laws. 　　An exchange of notes which includes certain understandings is enclosed for information only. 　　A technical memorandum explaining in detail the provisions of the Convention is being prepared by the Department of the Treasury and will be submitted to the Senate Committee on Foreign Relations. 　　The Department of the Treasury, with the cooperation of the Department of State, was primarily responsible for the negotiation of the Convention. It has the full approval of both Departments. Respectfully submitted, JAMES A. BAKER III. Enclosures: As stated. LETTER OF TRANSMITTAL THE WHITE HOUSE, February 5, 1990. To the Senate of the United States: 　　I transmit herewith for Senate advice and consent to ratification the Convention between the Government of the United States of America and the Government of the Republic of Finland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital, signed at Helsinki on September 21, 1989. I also transmit the report of the Department of State on the convention. 　　The convention would replace the existing income tax treaty with Finland that was signed on March 6, 1970. It is based on the model income tax conventions of the Organization for Economic Cooperation and Development and the Department of the Treasury and takes into account the changes in United States income tax law resulting from the Tax Reform Act of 1986. 　　The convention contains provisions designed to prevent third-country residents from taking unwarranted advantage of the convention by routing income from one Contracting State through an entity created in the other. The convention also provides for the exchange of information by the competent authorities of the Contracting States. I recommend the Senate give early and favorable consideration to the convention and give its advice and consent to ratification. GEORGE BUSH. REPUBLIC OF FINLAND ) CITY OF HELSINKI )ss: EMBASSY OF THE UNITED STATES OF AMERICA ) 　　I, Robert O. Tatge Consul of the United States of America at Helsinki, Finland, duly commissioned and qualified, do hereby certify that the annexed copy is a true and faithful copy of the original this day exhibited to me, the same having been carefully examined by me and compared with the said original and found to agree therewith word for word and figure for figure. 　　IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 21st day of September, 1989. (s) Robert O. Tatge Consul of the United States of America