[Code of Federal Regulations]
[Title 26, Volume 18, Parts 500 to 599]
[Revised as of April 1, 2000]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR514.4]
[Page 67-68]
TITLE 26--INTERNAL REVENUE
CHAPTER 1--INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
(Continued)
PART 514--FRANCE--Table of Contents
Subpart--Withholding of Tax
Sec. 514.4 Interest.
(a) General. The rate of United States tax imposed by the Internal
Revenue Code upon interest on bonds, securities, notes, debentures, or
on any other form of indebtedness, including interest on obligations of
the United States, obligations of instrumentalities of the United
States, and mortgages and bonds secured by real property, which is
derived from sources within the United States in taxable years beginning
on or after January 1, 1952, by a nonresident alien (including a
nonresident alien individual, fiduciary, and partnership) who is a
resident of France, or by a French corporation or other entity, shall
not exceed 15 percent under the provisions of Article I(d) of the
convention if such alien, corporation, or other French entity at no time
during the taxable year in which such interest is received has a
permanent establishment in the United States. As to what constitutes a
permanent establishment see Article III(a) of the convention.
(b) Application of reduced rate at source. (1) To secure withholding
of United States tax at the rate of 15 percent at source in the case of
coupon bond interest, the nonresident alien who is a resident of France,
or the French corporation or other entity, shall, for each issue of
bonds, file Form 1001-F in duplicate when presenting the interest
coupons for payment. This form shall be signed by the owner of the
interest, or by his trustee or agent,
[[Page 68]]
and shall show the name and address of the obligor, the name and address
of the owner of the interest, and the amount of the interest. It shall
contain a statement that the owner (i) is a resident of France, or is a
French corporation or other entity, and (ii) has no permanent
establishment in the United States.
(2) The reduction in the rate of United States tax contemplated by
Article 6A of the convention, insofar as it concerns coupon bond
interest, is applicable only to the owner of the interest. The person
presenting the coupon or on whose behalf it is presented shall, for the
purpose of the reduction in tax, be deemed to be the owner of the
interest only if he is, at the time the coupon is presented for payment,
the owner of the bond from which the coupon has been detached. If the
person presenting the coupon, or on whose behalf it is presented, is not
the owner of the bond, Form 1001, and not Form 1001-F, shall be
executed.
(3) The original and duplicate of Form 1001-F shall be forwarded by
the withholding agent to the Director, International Operations
Division, Internal Revenue Service, Washington 25, D. C., with the
annual return on Form 1042. Form 1001-F shall be listed on Form 1042.
(4) To secure the reduced rate of United States tax at source in the
case of interest other than coupon bond interest, the nonresident alien
individual who is a resident of France, or the French corporation or
other entity, shall file Form 1001A-F in duplicate with the withholding
agent in the United States. This form shall be signed by the owner of
the interest, or by his trustee or agent, and shall show the name and
address of the obligor and the name and address of the owner of the
interest. It shall contain a statement that the owner (i) is a resident
of France, or is a French corporation or other entity, and (ii) has no
permanent establishment in the United States.
(5) Form 1001A-F shall be filed with the withholding agent for each
successive three-calendar-year period during which such interest is
paid. For this purpose, the first such period shall commence with the
beginning of the calendar year in which such income is first paid on or
after January 1, 1957. Each such form filed with any withholding agent
shall be filed not later than 20 days preceding the date of the first
payment within each successive period, or, if that is not possible
because of special circumstances, as soon as possible after such first
payment. Once such a form has been filed in respect of any three-
calendar-year period, no additional Form 1001A-F need be filed in
respect thereto unless the Commissioner of Internal Revenue notifies the
withholding agent that another such form shall be filed by the taxpayer.
If, after filing such form, the taxpayer ceases to be eligible for the
reduced rate of United States tax granted by Article 6A of the
convention in respect to such interest, he shall promptly notify the
withholding agent by letter in duplicate. When any change occurs in the
ownership of the interest as recorded on the books of the payer, the
reduction in rate of withholding of United States tax shall no longer
apply unless the new owner of record is entitled to and does properly
file a Form 1001A-F with the withholding agent.
(6) The duplicate of each Form 1001A-F shall be immediately
forwarded by the withholding agent to the Director, International
Operations Division, Internal Revenue Service, Washington 25, D. C.