[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: 26CFR503.5]

[Page 21-22]
 
                       TITLE 26--INTERNAL REVENUE
 
     CHAPTER 1--INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY 
                               (Continued)
 
PART 503--GERMANY--Table of Contents
 
                       Subpart--Withholding of Tax
 
Sec. 503.5  Private pensions and private life annuities.

    (a) General. Private pensions and private life annuities, as defined 
in Article XI (3) and (4) of the convention, which are received from 
sources within the United States in taxable years beginning on or after 
January 1, 1954, by a nonresident alien individual who is a resident of 
the Federal Republic of Germany are exempt from United States tax under 
the provisions of Article XI(2) of the convention. Such items of income 
are, therefore, not subject to the withholding of United States tax at 
source.
    (b) Application of exemption from withholding. (1) To avoid 
withholding of United States tax at source in the case of the items of 
income to which paragraph (a) of this section is applicable, the 
nonresident alien individual who is a resident of the Federal Republic 
of Germany shall notify the withholding agent by letter in duplicate 
that such income is exempt from United States tax under the provisions 
of Article XI of the convention. The letter of notification shall be 
signed by the owner of the income, shall show the name and

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address of both the payer and the owner of the income, and shall contain 
a statement that the owner, an individual, is neither a citizen nor a 
resident of the United States but is a resident of the Federal Republic 
of Germany.
    (2) If such letter is also to be used as authorization for the 
release, pursuant to Sec. 503.6(a)(3), of excess tax withheld from such 
items of income, it shall also contain a statement that the owner was, 
at the time when the income was received from which the excess tax was 
withheld, neither a citizen nor a resident of the United States but was 
a resident of the Federal Republic of Germany.
    (3) This letter shall constitute authorization for the payment of 
such items of income without withholding of United States tax at source 
unless the Commissioner of Internal Revenue subsequently notifies the 
withholding agent that the tax shall be withheld with respect to 
payments of such items of income made after receipt of such notice. If, 
after filing a letter of notification, the owner of the income ceases to 
be eligible for the exemption from United States tax granted by the 
convention in respect to such income, he shall promptly notify the 
withholding agent by letter in duplicate. When any change occurs in the 
ownership of such income as recorded on the books of the payer, the 
exemption from withholding of United States tax shall no longer apply 
unless the new owner of record is entitled to and does properly file a 
letter of notification with the withholding agent.
    (4) 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.