[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: 26CFR514.1]
[Page 64-66]
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. 514.1 Introductory.
Taxable Years Beginning After December 31, 1956, And Before January 1,
1967, or Dividends, Interest, And Royalties Paid Before August 11, 1968
Source: Treasury Decision 6273, 22 FR 9530, Nov. 28, 1957; 25 FR
14022, Dec. 31, 1960, unless otherwise noted.
Effective Date Note: By T.D. 8734, 62 FR 53498, Oct. 14, 1997, the
undesignated centerheading preceding Sec. 514.1 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.
(a) Applicable provisions of convention. The income tax convention
between the United States and France, signed on July 25, 1939, and
October 18, 1946, as modified by the supplemental convention, signed
June 22, 1956 (the instruments of ratification of which were exchanged
on June 13, 1957), referred to in this part as the convention, provides
in part as follows, the quoted articles being effective as indicated:
Article I(a) of the Supplemental Convention of 1956, on June 13,
1957.
Article I(d) of the Supplemental Convention of 1956, on January 1,
1952.
Article 7 and the Protocol of the Convention of 1939, on January 1,
1945.
The supplemental convention signed June 22, 1956, provides in part
as follows:
Article I
The provisions of the Convention and Protocol between the United
States and the French Republic signed at Paris on July 25, 1939 are
hereby modified and supplemented as follows:
(a) By striking out Article 1(a) and inserting in lieu thereof the
following:
``(a) In the case of the United States: The Federal income taxes
(including surtaxes and excess profits taxes) and the documentary taxes
on sales or transfers of shares or certificates of stock or bonds.''
* * * * *
(d) By adding immediately after Article 6 the following new
articles:
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``Article 6A
Dividends and interest derived, on or after January 1, 1952, from
sources within one of the contracting States by a resident or
corporation or other entity of the other State, not having a permanent
establishment in the former State shall be subject to tax by such former
State at a rate not in excess of 15 percent of the gross amount of such
dividends or interest. Such reduced rate of tax shall not apply to
dividends or interest paid prior to the calendar year in which are
exchanged the instruments of ratification of the present Convention if,
for the taxable year in which such dividends or interest is received,
penalty for fraud with respect to the taxes which are the subject of the
present Convention has been imposed against the recipient of such
dividends or interest.''
* * * * *
Article III
(a) The present Convention shall be ratified and the instruments of
ratification shall be exchanged at Paris as soon as possible.
(b) Its provisions shall come into force and shall become effective
as of the date of the exchange of the instruments of ratification
subject both to the provisions of Article I (d) and (e) and to the
provisions set forth herein below.
* * * * *
(c) If refund of any overpayment resulting from the application of
Article I(d) of the present Convention is prevented on the date of
exchange of instruments of ratification or within two years from such
date by the operation of any law, refund of such overpayment (without
interest) shall nevertheless be made provided that claim for refund is
filed within two years after the date of the exchange of instruments of
ratification of the present Convention with the contracting State to
which such overpayment was made.
(d) The present Convention shall remain effective so long as the
Conventions signed July 25, 1939 and October 18, 1946, remain effective.
The convention of July 25, 1939, provides, in part, as follows:
Article 7
* * * * *
Royalties derived from within one of the contracting States by a
resident, or by a corporation or other entity of the other contracting
State as consideration for the right to use copyrights, patents, secret
processes and formulae, trademarks and other analogous rights shall be
exempt from taxation in the former State, provided such resident,
corporation or other entity does not have a permanent establishment
there.
Article 8
* * * * *
Private pensions and life annuities derived from within one of the
contracting States and paid to individuals residing in the other
contracting State shall be exempt from taxation in the former State.
Protocol:
* * * * *
III. As used in this Convention:
(a) The term ``permanent establishment'' includes branches, mines
and oil wells, plantations, factories, workshops, stores, purchasing and
selling and other offices, agencies, warehouses, and other fixed places
of business but does not include a subsidiary corporation.
When an enterprise of one of the contracting States carries on
business in the other State through an employee or agent, established
there, who has general authority to negotiate and conclude contracts or
has a stock of merchandise from which he regularly fills orders which he
receives, this enterprise shall be deemed to have a permanent
establishment in the latter State. But the fact that an enterprise of
one of the contracting States has business dealings in the other State
through a bona fide commission agent or broker shall not be held to mean
that such enterprise has a permanent establishment in the latter State.
Insurance enterprises shall be considered as having a permanent
establishment in one of the States as soon as they receive premiums from
or insure risks in the territory of that State.
IV. The term ``life annuities'' referred to in Article 8 of this
Convention means a stated sum payable periodically at stated times
during life, or during a specified number of years to the person who has
paid the premium or a gross sum for such an obligation.
The convention of October 18, 1946, provides, in part, as follows:
Title III
Administrative Assistance
* * * * *
Article 13
(1) The competent authorities of the two Contracting States may
prescribe regulations necessary to interpret and carry out
[[Page 66]]
the provisions of the present Convention and the Convention of July 25,
1939.
* * * * *
(b) Definitions--(1) In general. Any term defined in the convention
or Secs. 514.1 to 514.10 shall have the meaning so assigned to it; any
term not so defined shall, unless the context otherwise requires, have
the meaning which such term has under the internal revenue laws of the
United States.
(2) France. As used in Secs. 514.1 to 514.10, the term ``France'',
when used in a geographical sense, means continental France, exclusive
of Algeria and the Colonies.