US-Japan protocol exempts interest from source State taxation and reduces ownership for exemption from tax on certain dividends to 50%

January 2013


The US and Japan recently signed a new protocol and exchange of notes amending the existing 2003 income tax treaty, protocol and exchange of notes. The protocol is significant since it provides for exclusive residence State taxation of interest. In addition, the protocol expands the category of parent-subsidiary dividends exempt from source State taxation and allows the United States to fully apply the FIRPTA rules with respect to capital gains. The protocol also establishes a mandatory arbitration procedure for the resolution of competent authority cases. Unlike the recent protocol with Spain, the protocol with Japan does not revise the treaty's LOB article.

Contact us

Tim Anson
ITS Co-leader
Tel: +1 (202) 414 1664

Michael Urse
ITS Leader
Tel: +1 (216) 875 3358

Follow us