811.512362 Shipping/26
The Ambassador in Germany (Dodd) to the Secretary of
State
No. 1180
Berlin, August 17, 1934.
[Received
September 4.]
Sir: With reference to despatch No. 951 of
June 20, 1934, on this subject,16 I have the honor to inform the Department that
the tax expert of the Foreign Office, Dr. Dehl, now having returned
from annual leave, the matter of the protection of American shipping
companies
[Page 501]
from the
imposition of the trade tax (Gewerbesteuer)
was discussed with him on August 14, 1934, and a memorandum left,
copy of which is enclosed.
During the course of the conversation with Dr. Dehl, it was
emphasized that whereas in Germany, for example, the city of Berlin
could impose such taxes independently of the jurisdiction of the
Finance Ministry, the Federal Government alone could impose such
taxes in the United States, and attention was again called to the
last two paragraphs of the legal opinion sent as enclosure No. 6
with despatch No. 507 of February 6, 1934, a copy of which is in the
possession of the Foreign Office.
Dr. Dehl acceded to the Embassy’s request, that he would take up the
matter with the Finance Ministry and the Ministry of Economics in
accordance with paragraph (c) of the copy of
the memorandum enclosed and furnish the Embassy an answer in writing
as to whether the Finance Ministry could issue the necessary
instructions under the existing arrangement to free American
shipping companies from the trade tax, and if this should prove
impossible, he would secure the views of the competent Ministry as
to the possibility of reaching an understanding for a further
exchange of notes on the lines specified by the Department. Upon the
receipt of the Foreign Office reply, this will be transmitted
promptly for the Department’s consideration with the called for
suggestions from the Embassy.
Respectfully yours,
[Enclosure—Memorandum]
In 1923, 1924 and 1925, the Embassy and the Ministry for Foreign
Affairs exchanged notes effecting an arrangement between the
United States and Germany for Relief from Double Taxation on
Shipping Profits.
In a Memorandum dated September 2, 1933,17 the claim for the
Trade Tax (Gewerbesteuer) against the
United States Lines, Inc., was referred to. The Ministry replied
to this Memorandum in its note verbale—V
958—of January 25, 1934,17 saying that the Prussian Minister of the
Interior could not alter the decision of the Biirger-meister of
Berlin who had decided that the company was not exempt from the
Trade Tax. It is therefore noted that:
- (a)
- Under the United States Constitution, municipal
subdivisions and States have no authority to place
burdens, by taxation or otherwise, on foreign
commerce.
- (b)
- It appears that the “Trade Taxes” (Gewerbesteuer) levied against the United
States Lines, Inc., are imposed by German States and
Municipalities without regulation by the Ministry of
Finance. In this regard German shipping companies seem
to enjoy more favorable treatment than United States
shipping companies under the Reciprocal Agreement
mentioned.
- (c)
- If it is impossible for the Ministry of Finance to
issue such instructions as would align the situation on
a completely reciprocal basis under the existing
arrangement, the Department of State is desirous of
endeavoring to reach an understanding for a further
exchange of notes with a view to effecting an
arrangement that would protect American shipping
companies from the imposition of such taxes.
[By a note verbale of January 31,
1935, enclosed with despatch No. 1735, February 2, 1935, the
German Government informed the American Embassy that the
“competent German tax authorities have been given due
instructions and have been requested to desist from
collecting the trade tax demanded of the United States lines
but not yet paid.” (811.512362 Shipping/28).
By instruction No. 374, March 19, 1935, the Embassy was
instructed “to advise the Foreign Office in response to its
note verbale of January 31, 1935,
that reciprocity is granted by the United States in respect
to the collection of such taxes” (811.512362
Shipping/29).]
