[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: 26CFR521.1]
[Page 134-136]
TITLE 26--INTERNAL REVENUE
CHAPTER 1--INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
(Continued)
PART 521--DENMARK--Table of Contents
Subpart--Withholding of Tax
Sec. 521.1 Introductory.
Source: Treasury Decision 5692, 14 FR 1123, Mar. 12, 1949, unless
otherwise noted. Redesignated at 25 FR 14022, Dec. 31, 1960.
Effective Date Note: By T.D. 8732, 62 FR 53498, Oct. 14, 1997,
Subpart--Withholding of Tax, consisting of Secs. 521.1 through 521.8 was
removed, effective Jan. 1, 1999. By T.D. 8804, 63 FR 72183, Dec. 31,
1998, the effective date was delayed until Jan. 1, 2000. By T.D. 8856,
64 FR 73408, Dec. 30, 1999, the effective date was delayed until Jan. 1,
2001.
Release of Excess Tax Withheld and Reduction in Rate of Withholding
(a) The income tax convention between the United States and the
Kingdom of Denmark, signed May 6, 1948, proclaimed by the President of
the United States on December 8, 1948, and effective as to taxable years
beginning after December 31, 1947 (referred to in this subpart as the
convention), provides in part as follows:
Article I
(1) The taxes referred to in this Convention are:
(a) In the case of the United States of America: The Federal income
tax, including surtaxes.
(b) In the case of Denmark:
The national income tax, including the war profits tax.
The intercommunal income tax.
The communal income tax.
(2) The present Convention shall also apply to any other taxes of a
substantially similar character imposed by either contracting State
subsequently to the date of signature of the present Convention.
Article II
(1) As used in this Convention:
(a) The term ``United States'' means the United States of America,
and when used in a geographical sense includes only the States, the
Territories of Alaska and Hawaii, and the District of Columbia.
(b) The term ``Denmark'' means the Kingdom of Denmark; the
provisions of the Convention shall not, however, extend to the Faroe
Islands; nor do they apply to Greenland.
(c) The term ``permanent establishment'' means a branch office,
factory, warehouse or other fixed place of business, but does not
include the casual and temporary use of merely storage facilities, nor
does it include an agency unless the agent has and exercises a
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general authority to negotiate and conclude contracts on behalf of an
enterprise or has a stock of merchandise from which he regularly fills
orders on its behalf. An enterprise of one of the contracting States
shall not be deemed to have a permanent establishment in the other State
merely because it carries on business dealings in such other State
through a bona fide commission agent, broker or custodian acting in the
ordinary course of his business as such. The fact that an enterprise of
one of the contracting States maintains in the other State a fixed place
of business exclusively for the purchase of goods or merchandise shall
not of itself constitute such fixed place of business a permanent
establishment of such enterprise. The fact that a corporation of one
contracting State has a subsidiary corporation which is a corporation of
the other State or which is engaged in trade or business in the other
State shall not of itself constitute that subsidiary corporation a
permanent establishment of its parent corporation.
(d) The term ``enterprise of one of the contracting States'' means,
as the case may be, ``United States enterprise'' or ``Danish
enterprise.''
(e) The term ``enterprise'' includes every form of undertaking
whether carried on by an individual, partnership, corporation, or any
other entity.
(f) The term ``United States enterprise'' means an enterprise
carried on in the United States of America by a resident of the United
States of America or by a United States corporation or other entity; the
term ``United States corporation or other entity'' means a partnership,
corporation or other entity created or organized in the United States of
America or under the law of the United States of America or of any State
or Territory of the United States of America.
(g) The term ``Danish enterprise'' means an enterprise carried on in
Denmark by a resident of Denmark or by a Danish corporation or other
entity; the term ``Danish corporation or other entity'' means a
partnership, corporation or other entity created or organized in Denmark
or under Danish laws.
(h) The term ``competent authorities'' means, in the case of the
United States the Commissioner of Internal Revenue or his authorized
representative; and in the case of Denmark, the Chief of the Taxation
Department of the Ministry of Finance (Generaldirektren for
Skattevaesenet) or his authorized representative.
(2) In the application of the provisions of the present Convention
by one of the contracting States any term not otherwise defined shall,
unless the context otherwise requires, have the meaning which such term
has under its own tax laws.
* * * * *
Article VI
(1) Dividends shall be taxable only in the contracting State in
which the shareholder is resident or, if the shareholder is a
corporation or other entity, in the contracting State in which such
corporation or other entity is incorporated or organized.
(2) Each of the contracting States reserves, however, the right to
collect and retain the tax, which, under its revenue laws, is deductible
at the source with respect to such dividends, but the tax shall not
exceed 15 percent of the amount of dividends derived from sources within
such State by a resident, corporation or other entity of the other
State, if the recipient has no permanent establishment in the
contracting State from which the dividends are derived.
(3) It is agreed, however, that the rate of dividend tax at the
source shall not exceed five percent if the shareholder is a corporation
controlling, directly or indirectly, at least 95 percent of the entire
voting power in the corporation paying the dividend, and if not more
than 25 percent of the gross income of such paying corporation is
derived from interest and dividends, other than interest and dividends
received from its own subsidiary corporations. Such reduction of the
rate of five percent shall not apply if the relationship of the two
corporations has been arranged or is maintained primarily with the
intention of securing such reduced rate.
Article VII
Interest on bonds, securities, notes, debentures, or on any other
form of indebtedness derived from sources within one of the contracting
States by a resident or corporation or other entity of the other
contracting State not having a permanent establishment in the former
State shall be exempt from tax by such former State.
Article VIII
Royalties and other amounts derived as consideration for the right
to use copyrights, patents, designs, secret processes and formulas,
trade-marks and other like property (including rentals and like payments
in respect of motion picture films) derived from sources within one of
the contracting States by a resident or corporation or other entity of
the other contracting State not having a permanent establishment in the
former State shall be exempt from taxation in such former State.
* * * * *
Article X
* * * * *
(2) Private pensions and life annuities derived from within one of
the contracting
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States and paid to individuals residing in the other contracting State
shall be exempt from taxation in the former State.
(3) The term ``life annuities'' as used herein means a stated sum
payable periodically at stated times during life, or during a specified
number of years, under an obligation to make the payments in
consideration of a gross sum paid for such obligation.
* * * * *
Article XXII
The competent authorities of the two contracting States may
prescribe regulations necessary to interpret and carry out the
provisions of this Convention. With respect to the provisions of this
Convention relating to exchange of information and mutual assistance in
the collection of taxes, such authorities may, by common agreement,
prescribe rules concerning matters of procedure, forms of application
and replies thereto, conversion of currency, disposition of amounts
collected, minimum amounts subject to collection and related matters.
Article XXIII
(1) The present Convention shall be ratified and the instruments of
ratification shall be exchanged at Washington as soon as possible.
(2) Upon the exchange of instruments of ratification, the present
Convention shall have effect.
(a) in the case of United States tax, for the taxable years
beginning on or after the first day of January of the year in which such
exchange takes place;
(b) in the case of Danish tax, for the taxable years beginning on or
after the first day of April of the year in which such exchange takes
place.
(3) The present Convention shall continue effective for a period of
five years and indefinitely after that period, but may be terminated by
either of the contracting States at the end of the five-year period or
at any time thereafter, provided that at least six months' prior notice
of termination has been given and, in such event, the present Convention
shall cease to be effective.
(a) As respects United States tax, for the taxable years beginning
on or after the first day of January next following the expiration of
the six-month period;
(b) As respects Danish tax, for the taxable years beginning on or
after the first day of April next following the expiration of the six-
month period.
* * * * *
(b) As used in this subpart, unless the context otherwise requires,
the terms defined in the above articles of the convention shall have the
meanings so assigned to them.