Nr. III

Royal Netherlands Embassy

EA-9424

Washington DC, September 11, 1987

Mr. Secretary,

I have the honour to refer to your notes of June 29 and July 10, 1987, regarding the Convention between the United States of America and the Kingdom of The Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and certain other taxes, signed at Washington on April 19, 1948, and extended to the Netherlands Antilles, effective November 19, 1955, and the Protocol supplementing the said Convention for the purpose of facilitating the extension to the Netherlands Antilles, signed at Washington June 15, 1955; the related Notes exchanged at Washington on June 24 and August 7, 1952, September 15 and November 4 and 10, 1955, and the Protocol modifying and supplementing the extension of the said Convention to the Netherlands Antilles, signed at The Hague on October 23, 1963, all applicable to Aruba as a separate entity as of January 1, 1986.

The purpose of those notes was to terminate, effective January 1, 1988, the Convention as amended, insofar as it applies to the Netherlands Antilles and Aruba (hereinafter referred to as the Convention), with the exception of Article VIII of the Convention and such ancillary provisions in the Convention as apply to effectuate, modify or limit that article.

I also have the honour to refer to consultations between representatives of both Governments held at The Hague on September 4, 1987.

Those consultations demonstrated a common understanding concerning the interpretation of the legal aspects of the above-mentioned notes. It was understood that the effect is that the Convention will on January 1, 1988, cease to be in force with the exception of Article VIII and the ancillary provisions indicated above.

During the consultations the representatives of both Governments indicated that neither Government has the intention to terminate Article VIII and the ancillary provisisons[lees: provisions]. In this context it was indicated that it is not the intention of the Government of the United States to alter, through legislative proposals or otherwise, the level of revenues which the Government of the Netherlands Antilles or the Government of Aruba anticipates with respect to outstanding Eurobonds of the type described in the grandfather clause of the United States Tax Reform Act of 1984.

I have the honour to state that the Government of the Kingdom of The Netherlands accepts these understandings and would appreciate receiving a note indicating that the Government of the United States also accepts them.

Accept, Excellency, the renewed assurances of my highest consideration.