[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: 26CFR520.103]
[Page 128]
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. 520.103 Definitions.
(a) Any word or term used in this subpart which is defined in the
convention shall be given the definition assigned to such word or term
in such convention. Any word or term used in this subpart which is not
defined in the convention but is defined in the Internal Revenue Code
shall be given the definition contained therein.
(b) As used in this subpart:
(1) The term ``permanent establishment'' includes branches, mines
and oil wells, plantations, factories, workshops, warehouses, offices,
agencies, installations and other fixed places of business of an
enterprise but does not include the casual or temporary use of merely
storage facilities. A Swedish parent corporation having a subsidiary
corporation which latter corporation has a permanent establishment in
the United States will not be deemed, by reason of such fact, to have
itself a permanent establishment in the United States. A Swedish
enterprise as defined in the convention carrying on business in the
United States through an employee or agent, established in the United
States, who has general authority to contract for his employer or
principal, shall be deemed to have a permanent establishment in the
United States. However, business dealings in the United States by a
Swedish enterprise through a bona fide commission agent, broker or
custodian do not constitute a permanent establishment in the United
States.
(2) The term ``enterprise'' means any commercial or industrial
undertaking whether conducted by an individual, partnership, corporation
or any other entity. It includes such activities as manufacturing,
merchandising, mining, banking and insurance. It does not include the
operation of, or the trading in, real property located in the United
States. It does not include the rendition of personal services. Hence, a
nonresident alien individual, a resident of Sweden, rendering personal
services within the United States, is not merely by reason of such
services, engaged in an enterprise within the meaning of the convention
and his liability to Federal income tax is unaffected by Article II of
the convention.
(3) The term ``Swedish enterprise'' means an enterprise carried on
in Sweden by a nonresident alien individual resident in Sweden or by a
Swedish corporation or other entity. The term ``Swedish corporation or
other entity'' means a partnership, corporation or other entity created
or organized in Sweden or under the laws of Sweden. For example, an
enterprise carried on wholly without Sweden by a nonresident alien
individual resident in Sweden is not a Swedish enterprise within the
meaning of the convention.
(4) The term ``industrial and commercial profits'' means the profits
arising from the industrial, mercantile, manufacturing or like
undertakings of a Swedish enterprise as defined in this section. Such
term does not include dividends, interest, compensation for labor or
personal services, or income derived from real property or from any
interest in such property, including rentals and royalties therefrom and
gain from the sale or disposition thereof. Such latter items of income
are not governed by the provisions of Article II but are subject to the
rules elsewhere set forth in the convention and in this subpart with
respect to such specific items of income. As to gains from the sale or
exchange of capital assets, see Sec. 520.111.