[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: 26CFR520.113]

[Page 131-132]
 
                       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. 520.113  Compensation for labor or personal services.

    (a) Article XI of the convention adopts the principle that 
compensation for labor or personal services, including compensation 
realized in the practice of the liberal professions, is subject to tax 
only in the contracting State in which such services are rendered. 
Hence, in general such compensation derived by nonresident alien 
individuals residing in Sweden for services rendered in the United 
States is subject to Federal income tax. Such general rule is, however, 
subject to the following exceptions under the provisions of Article XI:
    (1) Such nonresident alien individual is not subject to Federal 
income tax upon compensation for labor or personal services performed 
within the United States if the following conditions prescribed by 
subparagraph (2) (i) and (ii) of this paragraph are met.
    (2) He is temporarily present in the United States for a period or 
periods:
    (i) Not exceeding 180 days during the taxable year and his 
compensation is received for labor or personal services

[[Page 132]]

performed as an employee of, or under contract with, a resident of 
Sweden or a Swedish corporation or other entity; or
    (ii) Not exceeding 90 days during the taxable year and the 
compensation received for such services does not exceed $3,000 in the 
aggregate for such taxable year even though such compensation is paid by 
a United States resident or by a domestic corporation or other domestic 
entity.
    (b) If, therefore, such nonresident alien individual (1) is 
temporarily present in the United States for a period or periods in 
excess of 90 days during the taxable year, or (2) receives more than 
$3,000 in the aggregate during the taxable year for labor or personal 
services performed within the United States he is not exempt under 
paragraph (a)(2)(ii) of this section, and his right to exemption under 
the convention will depend on his meeting both tests prescribed under 
paragraph (a)(2)(i) of this section.
    (c) These exceptions, however, do not extend to the professional 
earnings of actors, artists, musicians, professional athletes and those 
engaged in like activities. The professional earnings of such 
individuals resident in Sweden for services rendered within the United 
States are subject to the provisions of the Internal Revenue Code 
applicable generally to the taxation of nonresident alien individuals.