Convention Signed at Athens February 20, 1950; Protocol Signed at Athens April 20, 1953 　　Ratification of the Convention Advised by the Senate of the United States of America, with an Understanding, September 17, 1951 　　Convention Ratified by the President of the United States of America, Subject to the Said Understanding, December 5, 1951 　　Convention and Protocol Ratified by Greece December 22,1953 　　Ratifications Exchanged at Athens December 30, 1953 　　Convention and Protocol Proclaimed by the President of the United States of America January 15, 1954 　　Entered into Force December 30, 1953; Operative Retroactively January 1, 1953　And 　　Protocol of Exchange of Ratifications Signed at Athens December 30, 1953 GENERAL EFFECTIVE DATE UNDER ARTICLE XXI: 1 JANUARY 1953 TABLE OF ARTICLES Article I---------------------------------(Taxes Covered) Article II---------------------------------(General Definitions) Article III -------------------------------(Permanent Establishment) Article IV--------------------------------(Related Enterprises) Article V---------------------------------(Ships and Aircraft) Article VI--------------------------------(Interest) Article VII-------------------------------(Royalties) Article VIII------------------------------(Income from Real Property and Natural Resources) Article IX--------------------------------(Dividends) Article X-------------------------------- (Personal Services) Article XI--------------------------------(Government Employees; Pensions and Annuities) Article XII-------------------------------(Professors and Teachers) Article XIII------------------------------(Students and Apprentices) Article XIV------------------------------(Foreign Tax Credit) Article XV-------------------------------(Regulations) Article XVI------------------------------(Elimination of Double Taxation) Article XVII-----------------------------(Taxpayer Claims) Article XVIII----------------------------(Exchange of Information) Article XIX------------------------------(Mutual Assistance) Article XX-------------------------------(Limitation on Administrative Procedures) Article XXI------------------------------(Entry into Force; Termination) Protocol 1--------------------------------of 20 April, 1953 Protocol 2--------------------------------of 30 December, 1953 Letter of Submittal----------------------of 14 April, 1950 Letter of Transmittal--------------------of 17 April, 1950 The "Saving Clause"--------------------Paragraph 1 of Article XIV 　　CONVENTION WITH GREECE FOR AVOIDANCE OF DOUBLE TAXATION AND 　　PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME 　　　　　　　　　　　　　　MESSAGE 　　　　　　　　　　　　　　FROM 　　　　　　THE PRESIDENT OF THE UNITED STATES 　　THE CONVENTION WITH GREECE, SIGNED AT ATHENS ON FEBRUARY 20, 1950, 　　FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL 　　　　　EVASION WITH RESPECT TO TAXES ON INCOME 　　　　　　　　　　LETTER OF SUBMITTAL 　　　　　　　　　　　　　　　　　　　　　　　DEPARTMENT OF STATE, 　　　　　　　　　　　　　　　　　　　　　　　Washington, April 14, 1950. The PRESIDENT, The White House: 　　The undersigned, the Secretary of State, has the honor to lay before the President, with a view to its transmission to the Senate to receive the advice and consent of that body to ratification, if his judgement approve thereof, a convention between the United States of America and Greece for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, signed at Athens on February 20, 1950. 　　This convention, together with another relating to taxes on estates of deceased persons, was formulated as a result of technical discussions between representatives of each of the two Governments. As in similar discussions with representatives of other governments, an effort was made to determine the conventional bases upon which double taxation might be avoided and certain procedures for mutual administrative assistance in relation to taxation might be established. 　　The Department of State and the Treasury Department collaborated in the negotiation of the convention, after public announcement of the contemplated negotiations. It has the approval of both Departments. 　　It is believed that the income-tax convention with Greece, if and when brought into force, will establish, in the mutual interest of the two countries and of considerable benefit to taxpayers of both countries, a satisfactory basis for the accomplishment of objectives essentially the same as those of income-tax conventions now in force between the United States and certain other countries, namely, the elimination, as far as practicable, of double taxation with respect to the same income and the setting up of a system for the exchange of information and administrative assistance. 　　The convention contains provisions similar to, if not identical with, provisions in force between the United States and a number of other countries, dealing with such items as business income, interest royalties, government wages and salaries, compensation for personal services, pensions and life annuities, compensation of visiting professors or teachers, and payments for the maintenance, education, or training of students or business apprentices. It may be compared in this respect with existing conventions of the United States with Sweden (March 23, 1939, 54 Stat., pt. 2, 1759), France (July 25, 1939, 59 Stat., pt. 2, 893, as modified by the convention of October 18,1946, S. Ex. A, 80th Cong., 1st sess., and supplementary protocol of May 17, 1948, S. Ex. G, 80th Cong., 2d sess.), Canada (March 4, 1942, 56 Stat., pt. 2, 1399), the United Kingdom (April 16, 1945, with protocol of June 6,1946, 60 Stat., pt. 2, 1377), the Netherlands (April 29, 1948, S. Ex. I, 80th Cong., 2d sess.), and Denmark (May 6,1948, S. Ex. H, 80th Cong., 2d sess.). Also, comparison may be made with certain conventions now pending in the Senate, namely, those which have been signed with the Union of South Africa (December 13, 1946, S. Ex. 0, 80th Cong., 1st sess.), New Zealand (March 16, 1948, S. Ex. J, 80th Cong., 2d sess.), Belgium (October 28, 1948, S. Ex. I, 81st Cong., 1st sess.), Norway (June 13, 1949, S. Ex. Q, 81st Cong., 1st sess.), and Ireland (September 13, 1949, S. Ex. F, 81st Cong., 2d sess.). 　　The principal features and objectives of the convention may be summarized as follows: 　　(1) Description of the taxes which are the subject of the convention: article I. In the case of the United States the convention applies only to the Federal income tax, including surtaxes, and does not apply to taxes imposed by the several States of the United States, the District of Columbia, or the Territories or possessions of the United States, with the sole exception of the "national treatment" provisions in paragraph (3) of article XVI, wherein expression is given, on a reciprocal basis, to the long-recognized principles relating to equality of treatment in respect of the taxation of resident aliens as compared with the taxation of resident nationals. In the case of Greece the convention applies, correspondingly, to "the income tax, including the schedular or analytical tax, the complementary tax under the professional or business tax". 　　(2) Adoption of principles affecting the determination of amount, and affecting the taxation of business income derived by enterprises of one country from sources within the other country. Under article III, upon a reciprocal basis, the business income of a Greek enterprise would be subjected to taxation by the United States only if such enterprise is engaged in trade or business through a permanent establishment in the United States, "permanent establishment" being defined fully, along with various other terms, in article II. Article IV authorizes the allocation of business income as between the two countries, in accordance with the principle in section 45 of the Internal Revenue Code affecting the adjustment of accounts as between interlocking businesses, in order that a reasonable tax basis may he allocated to each of the two countries. Article V, relating to the reciprocal exemption from taxation of profits from the operation of ships or aircraft registered or documented in the respective countries, is consistent with the principle embodied in sections 212 (b) and 231(d) of the Internal Revenue Code, as amended, and applies only to business income from such operations, having no application to corporate dividends. 　　(3) Reciprocal exemption from taxation, upon certain conditions, specified items of income derived from sources within one country by residents or corporations of the other country. Article VI relates to exemption from taxation of interest derived by a resident or corporation of one of the countries from sources within the other country, with an exception in the case of interest paid by a subsidiary corporation in one country to its parent corporation in the other country. The Greek Government, being opposed in principle to exempting from Greek tax what, is deemed to be exorbitantly high interest, set a maximum of 9 percent per annum for the purposes of paragraph (2) of article VI. Article VII relates to exemption from taxation of royalties for the right to use copyrights, patents, trademarks, and analogous property and of royalties for the use of industrial, commercial, or scientific equipment. The provisions of article VII do not extend to royalties derived from the use or exploitation of motion-picture films; the absence of an adequate basis for reciprocal exemption and the comparative importance to the Greek Government of revenue derived from the exploitation of American films in Greece made it impracticable to include such royalties among those to which the exemption would apply. Article VIII relates to exemption from taxation of royalties from natural resources and rentals of real property; it is provided that a resident or corporation of one of the countries deriving such income from sources within the other country may elect to be subject to the tax of such other country on a net basis as if he were engaged in trade or, business therein through a permanent establishment. Article X provides for exemption from taxation with respect to compensation for labor or personal services performed by any person (a resident of one of the countries) temporarily present within the other country for a period or periods not exceeding 183 days during the taxable year, provided he is employed by a resident, corporation, or other entity of the country first mentioned or his compensation for such labor or personal services does not exceed $10,000 during the taxable year. Article XI contains the provisions regarding exemption from taxation of government salaries, wages, and pensions and of private pensions and life annuities. Articles XII and XIII contain, respectively, the provisions relating to exemption from taxation, on certain conditions, with respect to remuneration of professors or teachers and with respect to remittances received by students or business apprentices. 　　(4) Alleviation of taxation by the United States, as applied to nonresident aliens and foreign corporations, in the case of certain taxes which have been the subject of criticism as being extraterritorial in character. Under article IX, dividends and interest paid by a Greek corporation would be exempted from United States tax except where the recipient is a citizen, resident, or corporation of the United States. 　　(5) Allowance of credits for foreign taxes paid. The principle of the United States tax credit is adopted in article XIV, the provisions of which are similar in principle to provisions in all existing income-tax conventions of the United States. It will be noted that paragraph (1) of article XIV reserves the right of each country to continue to tax its own citizens, residents, and corporations as though the convention had not come into effect. By virtue of the credit provisions, double taxation may be eliminated in cases where no specific exemption from tax is allowable under the convention. 　　(6) Establishment of a system of administrative cooperation between the competent authorities of the two countries, involving exchange of information, mutual assistance in the collection of taxes in certain cases, and consultation. Article XV deals with the prescribing of regulations to give effect to the convention and of rules concerning procedure and related matters; Article XVI, in addition to the "national treatment" provision mentioned herein before, contains the customary provision that nothing in the convention shall restrict any exemption, deduction, credit, or other allowance accorded by the laws of one of the countries in the determination of its taxes and the provision regarding settlement of questions as to interpretation or application of the convention. Article XVII contains the provisions regarding action to be taken respecting claims lodged by taxpayers. Article XVIII relates to the exchange of information. Article XIX, relating to assistance in the collection of taxes, contains the provision that such assistance shall not be accorded with respect to the citizens, corporations, or other entities of the country to which application for assistance is made, except to the extent necessary to insure that the exemption or reduced rate of tax granted by the convention shall not be enjoyed by persons not entitled to such benefits. Article XX contains adequate safeguards against the carrying out of administrative measures at variance with the regulations and practice of the taxing country and against any requirement to comply with a request for information or assistance when this would be considered contrary to public policy or when compliance would involve disclosure of a technical secret or process relating to trade, industry, business, or a profession. 　　Article XXI provides for ratification and for the exchange of instruments of ratification and prescribes the effective date of the convention, namely, January 1 of the year in which the exchange of instruments of ratification takes place. It is provided further that the convention shall remain in force for a minimum period of 5 years, but may be terminated at the end of that period or thereafter by the giving of written notice by one of the contracting States to the other contracting State, in which event the convention would terminate on January 1 following the expiration of a 6-month period after the date of such notice. Respect fully submitted, DEAN ACHESON. (Enclosure: Income-tax convention between the United States and Greece, signed February 20,1950.) LETTER OF TRANSMITTAL THE WHITE HOUSE, April 17, 1950. To the Senate of the United States: 　　With a view to receiving the advice and consent of the Senate to ratification, I transmit herewith the convention between the United States of America and Greece, signed at Athens on February 20, 1950, for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. 　　I also transmit for the information of the Senate the report by the Secretary of State with respect to the convention. 　　The convention has the approval of the Department of State and the Treasury Department. 　　　　　　　　　　　　　　　　　　　　　　　　　　　　　HARRY S. TRUMAN.