[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: 26CFR509.7]
[Page 31-32]
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. 509.7 Release of excess tax withheld at source.
(a) General. In order to bring the convention into force and effect
at the earliest practicable date, (1) the reduced rate of tax of 15
percent to be withheld at the source on dividends, (2) the reduced rate
of tax of 5 percent to be withheld at the source on interest, and (3)
the exemption from tax otherwise withheld at the source on patent
royalties, copyright royalties, film rentals, and the like, are hereby
made effective beginning January 1, 1951, in any case in which such
dividends, interest, patent royalties, copyright royalties, film
rentals, and the like, are derived 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.
In the case of every such taxpayer who furnishes to the withholding
agent Form 1001A-S, as prescribed in Sec. 509.3(b) or Sec. 509.4, where
tax at the rate of 30 percent has been withheld on or after January 1,
1951, there shall be released by the withholding agent and paid over to
the person from whom withheld (1) in the case of interest (other than
coupon bond interest), an amount equal to 25 percent of such interest,
and (2) in the case of patent royalties, copyright royalties, film
rentals, and the like, an amount equal to the tax so withheld.
In the case of every such taxpayer who furnishes to the withholding
agent Form 1001-S, in duplicate, where tax at the rate of 28 percent or
30 percent, as the case may be, has been withheld on or after January 1,
1951, from coupon bond interest, there shall be released by the
withholding agent and paid over to the person from whom it was withheld
an amount equal to 25 percent of such interest. Form 1001-S, clearly
marked ``Substitute'' in order to replace any Forms 1001 previously
filed, is to be used solely for such release of excess tax withheld in
1951. One Form 1001-S, in duplicate, may be used to replace two or more
Forms 1001 previously filed in such year. The use of Form 1001-S with
each presentation of interest coupons for the purpose of securing the
reduced rate of tax is set forth in Sec. 509.3(b).
In the case of dividends paid to a nonresident alien (including a
nonresident alien individual, fiduciary, and partnership) whose address
at the time of payment was in Switzerland, or to a Swiss corporation
whose address at the time of payment was in Switzerland, where tax at
the rate of 30 percent has been withheld on or after January 1, 1951,
from such dividends, there shall be released by the withholding agent
and paid over to the person from whom it was withheld an amount equal to
15 percent of such dividends.
(b) Private pensions and life annuities paid in 1951 or subsequent
years. In order to bring the convention into force and effect at the
earliest practicable date, the exemption from tax otherwise withheld at
the source on private pensions and life annuities is hereby made
effective beginning January 1, 1951, in any case in which such pensions
and life annuities are derived from sources within the United States by
a nonresident alien individual who is a resident of Switzerland.
The person paying such income shall be notified by letter from the
resident of Switzerland that the income is exempt from taxation under
the provisions of Article XI (2) and (3), or XI (2) and (4), as the case
may be, of the convention. See Sec. 509.5. Such letter shall
[[Page 32]]
constitute authorization to the payer of such income, where tax at the
rate of 30 percent has been withheld on or after January 1, 1951, to
release and pay over to the person from whom it was withheld an amount
equal to the tax so withheld.
(c) Subsidiary's dividends. With respect to a dividend paid on or
after January 1, 1951, by a domestic corporation to a Swiss corporation
whose address is in Switzerland, tax shall be withheld in accordance
with the provisions of Sec. 509.2 unless prior to the date of payment of
such dividend the Commissioner of Internal Revenue has notified the
paying corporation that such dividend falls within the scope of Article
VI(2) of the convention. As soon as practicable after information
required under Sec. 509.2(b) is filed, the Commissioner of Internal
Revenue will determine whether the dividend involved falls within the
scope of Article VI(2) and may authorize the release of the excess tax
withheld with respect to dividends which come within the scope of such
provision.