[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.