851.512 American Stock Exchange Brokers/12: Telegram
The Acting Secretary of State to the Ambassador in France (Straus)
502. Reference your despatch 2339, December 3, and enclosures.30 You are requested to use your good offices and discuss this matter orally with the appropriate French officials, leaving a memorandum which points out in substance
- (1)
- That it is understood that the one per thousand tax imposed under the French laws of 1893 and 1898 on security transactions in France has heretofore been applied only to transactions executed in France and has not been extended to transactions executed in New York or on other foreign security markets.
- (2)
- There exists in the United States, and in the State of New York in particular, a transfer tax similar to the French tax. When persons in the United States trade on the French Stock Exchange, the American tax authorities do not claim any transfer tax upon such transactions.
- (3)
- The business of New York Stock Exchange houses in Paris has developed under the territorial applicability of the one per thousand tax. Substantial offices are maintained in France by New York Stock Exchange firms for the purpose of transmitting orders to be executed in New York. These offices expend substantial amounts in France for cables, payrolls, rent, miscellaneous expenses and French turnover commercial profits and license taxes. At this point you might [Page 101] add detailed information of expenditures as coming from New York stockbrokers in Paris. The imposition of the one per thousand tax would, in the opinion of the interested parties, make a continuation of operations in France prohibitive.
- (4)
- The imposition of the one per thousand tax would create a double taxation problem which the treaty between the United States and France on double taxation was designed to avoid in matters relating to income of business enterprises. Inasmuch as the desirability of avoiding double taxation has been recognized by both countries, it is hoped that some way may be found by the French authorities to prevent another double taxation situation from arising. This is particularly pertinent in view of the fact that the laws in question have not heretofore been applied to extraterritorial transactions and that substantial enterprise has been built up under such interpretation.
Before approaching the Foreign Office you may in your discretion confer again with counsel for interested parties with a view to coordinating your representations with the facts and securing any further suggestions they may have to make. You may confine your good offices to oral representations should you consider this course best calculated to securing effective results.
- Enclosures not printed.↩