[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: 26CFR509.3]
[Page 29-30]
TITLE 26--INTERNAL REVENUE
CHAPTER 1--INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
(Continued)
PART 509--SWITZERLAND--Table of Contents
Subpart--Withholding of Tax
Sec. 509.3 Interest.
(a) General. Interest on bonds, securities, notes, debentures, or
any other form of indebtedness (including interest on obligations of the
United States, obligations of instrumentalities of the United States,
and mortgages and bonds secured by real property) received in taxable
years beginning on or after January 1, 1951, from sources within the
United States by a nonresident alien (including a nonresident alien
individual, fiduciary, and partnership) who is a resident of
Switzerland, or by a Swiss corporation, is subject to United States tax
at the reduced rate of 5 percent under the provisions of Article VII of
the convention if such alien or corporation at no time during the
taxable year had a permanent establishment in the United States.
(b) Application of reduced rate at source. To secure the reduced
rate of tax at the source in the case of coupon bond interest, the
nonresident alien resident in Switzerland or the Swiss corporation shall
submit Form 1001-S, in duplicate, to the paying agent with each
presentation of interest coupons. Such form shall be signed by the owner
of the interest, trustee, or agent and shall show the name and address
of the obligor, the name and address of the owner of such interest, and
the amount of such interest. Such form shall contain a statement that
the owner is a resident of Switzerland or a Swiss corporation and that
such owner has no permanent establishment in the United States.
The reduction in the rate of United States tax contemplated by
Article VII of the convention, insofar as it concerns coupon bond
interest, is applicable only to the owner of such interest. The person
presenting such coupon or on whose behalf it is presented shall, for the
purpose of the reduction, be deemed to be the owner of the interest only
if he is, at the time the coupon is presented for payment, the owner of
the bond from which the coupon has been detached. If the person
presenting the coupon is not the owner of the bond, Form 1001, and not
Form 1001-S, shall be executed.
The original and duplicate ownership certificates, Form 1001-S, must
be forwarded to the Commissioner of Internal Revenue by the withholding
agent with the quarterly return, Form 1012, as provided in existing
regulations with respect to Form 1001. See Sec. 29.143-7 of Regulations
111 (26 CFR 1949 ed. Supps. 29.143-7) [and Sec. 39.143-7 of Regulations
118 (26 CFR, Rev. 1953, Parts 1-79, and Supps.)]. Form 1001-S need not
be listed on Form 1012.
In the case of interest coupons presented in Switzerland by a
nonresident alien who is not a resident of Switzerland, or by a foreign
corporation other than a Swiss corporation, ownership certificates, Form
1001, shall be filed as provided in existing regulations without
reference to the provisions of the convention. See Sec. 29.143-4 of
Regulations 111 (26 CFR 1949 ed. Supps. 29.143-4) [and Sec. 39.143-4 of
Regulations 118 (26 CFR, Rev. 1953, Parts 1-79, and Supps.)].
To secure the reduced rate of tax at the source in the case of
interest, other than interest payable by means of coupons, the
nonresident alien who is a resident of Switzerland or the Swiss
corporation shall file Form 1001A-S, in duplicate, with the withholding
agent in the United States. Such form shall be signed by the owner of
the interest, trustee, or agent and shall show the name and address of
the obligor and the name and address of the owner of such interest. Such
form shall contain
[[Page 30]]
a statement that the owner is a resident of Switzerland, or is a Swiss
corporation, not having a permanent establishment in the United States.
Form 1001A-S must be filed for each three-calendar-year period, and
the first such form filed by the taxpayer with any withholding agent
shall be filed not later than 20 days preceding the date of the first
payment of income in such period. If the taxpayer files such form with
the withholding agent in the calendar year 1951, or in any subsequent
calendar year, no additional Form 1001A-S need be filed prior to the end
of the two calendar years immediately following the calendar year in
which such form is so filed unless the Commissioner of Internal Revenue
notifies the withholding agent that an additional Form 1001A-S must be
filed by the taxpayer at any earlier date. If, after filing such form,
the taxpayer ceases to be eligible for the benefit of the convention, he
must promptly notify the withholding agent. When any change occurs in
the ownership of record of the income on the books of the payor, the
reduction in the rate of United States tax will no longer apply unless
Form 1001A-S is duly executed and filed with the payor by the new owner
of record of such income.
The duplicate of Form 1001A-S must be immediately forwarded by the
withholding agent to the Commissioner of Internal Revenue, Records
Division, Washington 25, D.C.
In the case of interest paid on or after January 1, 1951, by any
foreign corporation to a nonresident alien who is a resident of
Switzerland or to a Swiss corporation, not having a permanent
establishment in the United States, no withholding of United States tax
is required. See Article XIV of the convention.