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Volume 3 - Opinions of Counsel SBEA No. 104

Opinions of Counsel index

Foreign governments exemption (residence for consulate general) - Real Property Tax Law, § 418:

Real property owned by a foreign government or career head of a consular post and used as the residence of the latter is exempt from taxation but subject to special ad valorem levies and special assessments.

We have received correspondence with respect to the taxable status of a parcel of property in the Town of Eastchester, owned by the Consulate General of Iceland on behalf of Iceland and utilized as his residence.

In New York, the general rule is that all real property is subject to taxation unless specifically exempted therefrom by law. While section 418 of the Real Property Tax Law provides an exemption from taxation of property owned by United Nations member countries held in the name of the ambassador or minister plenipotentiary to the United Nations, there is no statute granting an exemption to consulate property.

In addition, diplomatic immunity, including immunity from taxation, has been recognized in New York whenever treaty obligations or general rules of international law so require. Although a treaty between Iceland and the United States which would exempt consular property is currently being negotiated, it has not been consummated at the present time.

We had generally considered that a consul, as a commercial agent or representative appointed by his government to reside in a foreign country and to watch over the commercial rights and privileges of the appointing country, is clothed only with authority for commercial purposes and generally is without diplomatic powers and functions. Accordingly, in the past our opinion has been that consular property, in the absence of a treaty stating otherwise, would not be exempt.

In Republic of Argentina v. City of New York (25 N.Y.2d 252, 250 N.E.2d 698, 303 N.Y.S.2d 644) the court was called upon to decide whether property owned by the Republic of Argentina and used as a consulate was exempt from taxes. Argentina argued that its immunity was established by the customs and practices of nations which are binding on state and local governments as a form of “federal common law”. The city did not dispute that it was bound by international law, but argued that no established rule prevents local taxation of consular offices in the absence of a treaty.

The court pointed out that where there is neither a treaty, statute nor controlling judicial precedent, all domestic courts must give effect to customary international law, and concluded that government-owned consular offices were exempt under rules of international law.

The court went on to cite the Vienna Convention on Consular Relations drafted in 1963. Although not ratified by the United States at the time of decision, the court stated it constituted “weighty authority: i.e., the consensus of opinion of the distinguished lawyers there assembled as to what principles on the subject were at that time ‘generally accepted’ as a part of international law.”

Article 32.1 of the document states:

Consular premises and the residence of the career head of consular post of which the sending State or any person acting on its behalf is the owner or lessee shall be exempt from all national, regional or municipal dues and taxes whatsoever, other than such as represent payment for specific services rendered (emphasis supplied).

While the traditional approach has been to regard a Consular appointee as a commercial agent rather than a diplomatic officer, the court recognized that the consul looks after not only the commercial interests of his country, but performs a wide range of governmental services as well. The relationship between a consul and the locality where he is situated may very well be called diplomatic. Almost every nation, including the United States, has abandoned the traditional distinction between consular and diplomatic personnel.

Therefore, the court held that consular property used for “public” or “governmental” purposes was entitled to exemption. It would appear that the court, relying so heavily on Article 32 of the Vienna Convention on Consular Relations (supra), would draw the same conclusion with respect to the residence of the career head of the consular post. Accordingly, even in the absence of a ratified treaty, it is our opinion that the residence of the career head of the Icelandic consular post would be exempt from taxation.

This brings us to the question of the time as of which tax relief should be available to the Icelandic Consul. We understand that the property in question was acquired on October 1, 1972, subsequent to the taxable status date of June 1, 1972 for the Town of Eastchester and January 1, 1972 for the Village of Bronxville. Accordingly, the property was properly taxable for 1972-1973 taxes. Apparently, the property was also assessed on the taxable portion of the 1973 assessment roll in the town and village. The first installment for village taxes has been paid by the Icelandic Consul, and the second installment is outstanding.

Under the concept of international comity and regard for another nation’s sovereignty, a claim for taxes by a locality is unenforceable, although the inability to enforce a tax does not preclude a locality from assessing a tax in the hope that it might be paid voluntarily. However, although the taxes paid by Iceland without protest constitute voluntary payments and are not refundable, there is no liability for further payments.

Such property will nevertheless remain subject to special ad valorem levies and special assessments since such charges “represent payment for specific services rendered” (see, 32.1 in document from the Vienna Convention on Consular Relations, supra).

January 9, 1974

NOTE: For a general discussion of the real property taxation of foreign consulate property see, 38 Albany Law Review 974 (1974).