[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: 26CFR502.5]

[Page 10-11]
 
                       TITLE 26--INTERNAL REVENUE
 
     CHAPTER 1--INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY 
                               (Continued)
 
PART 502--GREECE--Table of Contents
 
                       Subpart--Withholding of Tax
 
Sec. 502.5  Patent and copyright royalties.

    (a) General. (1) Royalties for the right to use copyrights, patents, 
designs, secret processes and formulae, trade marks, and other analogous 
property, and royalties and rentals for the use of industrial, 
commercial, or scientific equipment, which are derived from

[[Page 11]]

sources within the United States on or after January 1, 1953, by a 
nonresident alien (including a nonresident alien individual, fiduciary, 
and partnership) who is a resident of Greece, or by a Greek corporation, 
are exempt from United States tax under the provisions of Article VII of 
the convention if such alien or corporation at no time during the 
taxable year in which such income is derived has engaged in trade or 
business within the United States through a permanent establishment 
situated therein. Such royalties are, therefore, not subject to the 
withholding of United States tax at source. As to what constitutes a 
permanent establishment, see Article II(1)(i) of the convention.
    (2) The provisions of this section shall have no application to 
rentals or royalties in respect of motion picture films.
    (b) Application of exemption from withholding. (1) To avoid 
withholding of United States tax at source in the case of the income to 
which paragraph (a) of this section is applicable, the nonresident alien 
who is a resident of Greece, or the Greek corporation, shall notify the 
withholding agent by letter in duplicate that such income is exempt from 
United States tax under the provisions of Article VII of the convention. 
The provisions of Sec. 502.3(c) (other than those pertaining to the 
degree of control of voting power) relating to the execution, filing, 
and effective period of the letter of notification prescribed therein 
with respect to interest, including its use for the release of excess 
tax withheld, are equally applicable with respect to the income falling 
within the scope of this section.
    (2) Each letter of notification, or the duplicate thereof, shall be 
immediately forwarded by the withholding agent to the District Director 
of Internal Revenue, Audit Division, Alien Returns Section, Baltimore 2, 
Maryland.