[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: 26CFR514.103]

[Page 93-94]
 
                       TITLE 26--INTERNAL REVENUE
 
     CHAPTER 1--INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY 
                               (Continued)
 
PART 514--FRANCE--Table of Contents
 
                       Subpart--General Income Tax
 
Sec. 514.103  Scope of the convention.

    (a) The primary purposes of the convention are to avoid double 
taxation upon certain classes of income, and to inaugurate fiscal 
cooperation between the two States with respect to reciprocal disclosure 
of information and to the collection of the taxes enumerated in Article 
1 of the convention.
    (b) The specific classes of income from sources within the United 
States exempt under the convention from United States income taxes are:
    (1) Industrial and commercial profits of a French enterprise having 
no permanent establishment in the United States (Article 3);
    (2) Income derived by a French enterprise from the operation of 
ships documented under the laws of, or aircraft registered in, France 
(Article 6);
    (3) Royalties derived by a nonresident alien who is a resident of 
France or by a French corporation or other French entity (having no 
permanent establishment within the United States), for the right to use 
copyrights, patents, secret processes and formulae, trademarks and other 
analogous rights (Article 7);
    (4) Compensation and pensions paid by France or by a political 
subdivision of France to individuals (other than citizens of the United 
States) for services rendered to France whether within or without the 
United States (Article 8);
    (5) Private pensions and life annuities derived from within the 
United States and paid to nonresident alien individuals (whether or not 
such individuals are citizens of France) residing in France during the 
year in which such amounts are paid (Article 8);
    (6) Earned income of a doctor, lawyer, engineer, or other member of 
a liberal profession who is a nonresident alien individual and is a 
resident of France and does not maintain within the United States an 
office, establishment, installation, or other fixed center related to 
the practice of his profession within the United States (Article 10);
    (7) Gains from sources within the United States arising from the 
sale or exchange of stocks, securities, or commodities by a resident of 
France (other than a citizen of the United States) or a French 
corporation or other French entity unless such resident, corporation, or 
other entity has, at any time during the taxable year in which such sale 
takes place, a permanent establishment within the United States (Article 
11).
    (c) Except as expressly provided by the convention, the tax 
liability of nonresident aliens who are residents of France or of French 
corporations or

[[Page 94]]

other French entities is determined in accordance with the provisions of 
the laws and of the regulations thereunder applicable generally to 
nonresident alien individuals and to foreign corporations.
    (d) The convention shall not be construed to affect the liability to 
United States income taxation of citizens of France who are resident in 
the United States except to the extent that such individuals are 
entitled to the benefits of Articles 8, 14A, and 19 and to paragraph V 
of the protocol of the convention. The tax liability of a United States 
citizen or a resident of the United States, a member of a French 
partnership carrying on a French enterprise is not affected by Article 3 
of the convention. Such citizen or resident is subject to United States 
income tax upon his distributive share of the net income of such 
partnership even though the other members of such partnership are not 
subject to tax upon their share of the partnership's industrial and 
commercial profits from sources within the United States where the 
enterprise has no permanent establishment within the United States. The 
convention shall not be construed to affect the liability to United 
States income taxation of citizens of the United States or residents of 
the United States who are not citizens of France.
    (e) The convention has no reference to rates of taxation imposed by 
the respective States but is concerned with the exempting of income 
arising in one of the contracting States when such income is derived 
from sources within such contracting State by a resident or corporation 
or other entity of the other contracting State and meets the conditions 
upon which such exemption depends as prescribed in the convention. This 
subpart is not concerned with the provisions of Articles 14B, 15, 16, 
and 17 of the convention since such articles affect only the allowance 
against the taxes imposed by France of income and excess profits taxes 
paid to the United States or the application of French revenue laws and 
decrees.