[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: 26CFR520.112]

[Page 131]
 
                       TITLE 26--INTERNAL REVENUE
 
     CHAPTER 1--INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY 
                               (Continued)
 
PART 520--SWEDEN--Table of Contents
 
                       Subpart--General Income Tax
 
Sec. 520.112  Wages, salaries and similar compensation, pensions and life annuities.

    (a) Under Article X of the convention, wages, salaries and similar 
compensation and pensions paid by Sweden or by a political subdivision 
thereof to individuals temporarily residing in the United States are 
exempt from Federal income tax. By reason, however, of the application 
of Article XIV(a) of the convention, such exemption does not apply to 
recipients of such income who are either citizens of the United States 
or aliens resident therein. As to who are resident aliens, see 
Regulations 103 (26 CFR 1938 ed. Supps. 19.211-2 to 19.211-4), 
[Regulations 111 (26 CFR 1949 ed. Supps. 29.211-2 to 29.211-4) and 
Regulations 118 (Secs. 39.211-2 to 39.211-4, 26 CFR, Rev. 1953, Parts 1-
79, and Supps.)]. As to the taxation generally of the compensation of 
employees of foreign governments, see section 116(h) of the Internal 
Revenue Code and Regulations 103 (26 CFR 1938 ed. Supps. 19.116-2), 
[Regulations 111 (26 CFR 1949 ed. Supps. 29.116-2) and Regulations 118 
(Sec. 39.116-2, 26 CFR Rev. 1953, Parts 1-79, and Supps.)].
    (b) Under the provisions of the same article of the convention, 
private pensions and life annuities derived from sources within the 
United States by nonresident alien individuals residing in Sweden are 
exempt from the Federal income tax. Such items of income are, therefore, 
not subject to the withholding provisions of the Internal Revenue Code. 
See paragraph 5 of the protocol to the convention as to what constitutes 
life annuities. See also Sec. 520.109 with respect to patent and 
copyright royalties as to requirements necessary to avoid withholding of 
the tax at the source, which requirements are here also applicable.