TREATIES AND OTHER INTERNATIONAL ACTS SERIES 07-626 

________________________________________________________________________ 

TAX REIMBURSEMENT 

 Agreement between the 

UNITED STATES OF AMERICA 

and the PERMANENT COURT OF 

ARBITRATION 

Signed at The Hague June 26, 2007 

 with 

Annex 
 NOTE BY THE DEPARTMENT OF STATE 

 Pursuant to Public Law 89—497, approved July 8, 1966 

(80 Stat. 271; 1 U.S.C. 113)—

“. . .the Treaties and Other International Acts Series issued 

under the authority of the Secretary of State shall be competent 

 evidence . . . of the treaties, international agreements other than 

treaties, and proclamations by the President of such treaties and 

international agreements other than treaties, as the case may be, 

therein contained, in all the courts of law and equity and of maritime 

jurisdiction, and in all the tribunals and public offices of the 

United States, and of the several States, without any further proof 

or authentication thereof.” 
PERMANENT COURT OF ARBITRATION 

Tax Reimbursement 

Agreement signed at The Hague June 26, 2007; 

 Entered into force June 26, 2007. 

 With annex. 

 
TAX REIMBURSEMENT AGREEMENT BETWEEN

THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND

THE PERMANENT COURT OF ARBITRATION

This Agreement is made between the Government of the United States of

America (hereinafter "United States") and the Permanent Court of

Arbitration (hereinafter "PCA"), "the Parties."

It is the intent of the United States to assume sole responsibility pursuant to

this Agreement for funding the reimbursement of taxes to staff members of

PCA who are subject to United States tax law as United States citizens or

permanent resident aliens;

It is the intent of PCA to place the reimbursement of United States income

tax to its staff members on a sound basis; and

The Parties are desirous of concluding an agreement on reimbursement to

PCA staff members of United States Federal, state, and local income tax and

self-employment tax levied under United States law on the income they

receive as compensation for official services rendered to PCA (hereinafter

"institutional income");
THE PARTIES AGREE AS FOLLOWS:

1. PCA shall reimburse PCA staff members paid from the regular budget

who are liable for and pay United States Federal self-employment tax and

United States Federal, state, and local income taxes on their PCA

institutional income, as defined in the Annex to this Agreement, the amount

of those taxes, under the terms and conditions set forth below. This

Agreement does not cover staff members paid from voluntary funds. An

advance payment made by PCA relating to the estimated tax liability of a

staff member during a current year will be treated as reimbursement,

provided that such payment is effected by an instrument payable to the

Internal Revenue Service or counterpart body of the taxing state or local

government.

2. Subject to the availability of appropriated funds, the United States shall

reimburse PCA for each taxpayer an amount not to exceed the tax that would

be due if the specified categories of PCA income were the taxpayer's only

income, taking into account any special tax benefits available to United

States taxpayers employed abroad, as well as the deductions and personal

exemptions otherwise allowed.

3. PCA shall inform the staff members who seek reimbursement of taxes

under this Agreement that they are obligated to claim all deductions,

exemptions, or exclusions to which they are entitled under applicable tax

legislation and regulations.

4. For purposes of United States Federal income tax, deductions,

exemptions, and adjustments to income shall be apportioned on a pro rata

basis between taxable PCA institutional income and private income for the

purposes of calculating tax reimbursement, except where deductions and

exemptions relate to a specific category of income. "Taxable PCA

institutional income" means the amount of PCA income subject to tax after

the application of the foreign earned income exclusion.

5. Both parties shall take all possible measures to reduce or eliminate the

burden resulting from the cumulative effect of tax reimbursements being

treated as taxable income.

6. PCA staff members who seek reimbursement of taxes under this

Agreement are themselves responsible for complying with any income tax

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laws applicable to them. Penalties, interest, or other charges resulting from

noncompliance with such laws shall not be reimbursed by PCA to PCA staff

members and shall not be reimbursed by the United States to PCA.

7. PCA shall require each PCA staff member claiming tax reimbursement to

determine the status defined by United States tax law under which that staff

member files an income tax return, reimbursement being made on the basis

of the status under which taxes are in fact being paid.

8. PCA shall maintain separate accounting of the tax reimbursements

covered by this Agreement. PCA shall require each staff member receiving

tax reimbursement to authorize PCA to obtain confirmation from the United

States Internal Revenue Service and state and local government counterpart

bodies, as appropriate, of the tax liability of that staff member and the

payment of the tax due. PCA shall require each staff member to provide it

with all the materials necessary to verify that the amounts claimed under this

Agreement from PCA are the same as the tax liability the staff member

reports and the tax payments the staff member in fact makes.

9. Checks by PCA for payment of estimated taxes shall be made payable to

the Internal Revenue Service, or counterpart body of the taxing state or local

government, and checks for reimbursement of taxes already paid by a staff

member shall be made payable to the staff member concerned.

10. Reimbursement of the United States Federal self-employment taxes

shall equal the difference between the amount the staff member pays as a

result of the staff member's classification as a self-employed person, less any

applicable tax credit arising from the same qualification, and the amount the

staff member would have to pay in social security (Old Age, Survivors and

Disability Insurance) taxes and health insurance (Medicare) taxes were the

staff member classified as an employee.

11. The principles embodied in the present Agreement on reimbursement of

Federal taxes equally constitute the basis for the reimbursement of state and

local taxes.

12. The United States shall reimburse PCA on the basis of a certification

that reimbursements have been made by PCA to United States citizens, or

others who are liable to pay United States income taxes. The certification

shall set forth the names and United States social security numbers of the

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PCA staff members reimbursed, the total of PCA income against which the

United States tax has been paid (that is, institutional income as defined in the

Annex), the amounts reimbursed to PCA staff members, the tax year for

which reimbursement is made, the year in which reimbursement is made for

each category of tax specified in Article 1, and affirm that their salaries and

benefits are paid from the regular budget as required by Article 1. This

information shall be provided yearly to the United States by October 1

following the tax year for which the claim is made. Without prejudice to the

foregoing, PCA shall file all tax reimbursement claims for a particular tax

year, no later than 24 months from October 1 following the tax year for

which the claim is made.

13. The United States shall reimburse PCA at the earliest possible date

following receipt of the certification specified in Article 12 a sum sufficient

to cover all tax reimbursements paid by PCA with respect to preceding tax

years, in accordance with this Agreement.

14. Subject to the availability of funds, the United States and PCA may

agree to a reimbursement for such reasonable and necessary expenses as

PCA may incur in connection with the implementation of the administrative

procedures required to carry out the provisions of this Agreement.

15. This Agreement shall apply with regard to tax reimbursements for

institutional income earned on or after January 1, 2006.

16. This Agreement shall enter into force upon signature by the Parties and

may thereafter be terminated by either Party on December 31 of the year

following the year in which notice is given in writing to the other Party.

17. Should the United States conclude a tax reimbursement agreement with

any other international organization substantially more favorable to that

organization or its staff members than the present Agreement, the latter shall

be modified to extend to PCA the benefit of the former, subject to the

agreement of the United States, which shall not unreasonably be refused.

18. Any difficulties arising from the implementation of this Agreement shall

be resolved by consultations between the Parties.
Done at The Hague, in duplicate, in the English language this 26 th day of

June 2007.

FOR THE GOVERNMENT OF THE FOR THE PERMANENT

UNITED STATES OF AMERICA: COURT OF ARBITRATION:

Roland E. Arnall

Ambassador

U.S. Embassy The Netherlands

Tjaco van den Hout

Secretary General

Permanent Court of Arbitration

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ANNEX

Particulars of Institutional Income

"Institutional income," as used in this Tax Reimbursement Agreement,

includes only the following particulars of compensation:

- Basic salary

- Salary increments

- Overtime

- Reimbursement of United States Federal, state, or local income tax

payments and United States self-employment tax payments on institutional

income.

Should PCA approve the addition, modification, or deletion of any elements

of institutional income, this Annex may be modified by an exchange of

letters, subject to the agreement of the United States, which shall not be

unreasonably refused.

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