Exemption of Mission Premises from Taxation

Subject(s):

Diplomatic immunity — Diplomatic missions — Diplomatic relations — BITs (Bilateral Investment Treaties)

This chapter examines Article 23 of the Vienna Convention on Diplomatic Relations which deals with the exemption of the diplomatic mission premises from taxation. Article 23 states that the sending State and the head of the mission shall be exempt from all dues and taxes in respect of the premises of the mission. This exemption however shall not apply to dues and taxes payable under the law of the receiving State by persons contracting with the sending State or the head of the mission. This practice traces its roots from the nineteenth century when it was not based on diplomatic immunity but on courtesy. Many States concluded bilateral agreements or arrangements providing exemption—a practice which would have been unnecessary if customary international law had required it. During the twentieth century, general practice based on courtesy or on reciprocity began to harden into a customary rule requiring exemption from central and local taxes on mission property.