[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: 26CFR520.109]

[Page 130]
 
                       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. 520.109  Patent and copyright royalties.

    (a) Royalties and amounts derived from sources within the United 
States by a nonresident alien individual resident in Sweden or by a 
Swedish corporation or other entity (if such corporation or entity is 
not a resident of the United States) as consideration for the right to 
use copyrights, patents, secret processes and formulas, trade-marks and 
other analogous rights are exempt from Federal income taxation under the 
provisions of Article VI of the convention. Such items are therefore not 
subject to the withholding provisions of the Internal Revenue Code. Such 
exemption does not, however, apply in the case of a Swedish corporation 
engaged in trade or business within the United States or having an 
office or place of business therein. Such corporation is a resident 
Swedish corporation and hence the provisions of Article XIV (a) are 
applicable.
    (b) To obviate withholding of the tax at the source, the alien 
individual resident in Sweden or Swedish corporation or other entity 
should by letter, notify the payor of the income that such income is 
exempt from Federal income is exempt from Federal income taxation under 
the provisions of the convention. Such letter from such resident of 
Sweden shall contain his address and a statement that he is a resident 
of Sweden. The letter from such corporation or other entity shall 
contain the address of its office or place of business and a statement 
that it is a corporation or other entity organized under the laws of 
Sweden and shall be signed by an officer of the corporation or other 
entity giving his official title. The letter of notification of a copy 
thereof should be immediately forwarded by the recipient to the 
Commissioner of Internal Revenue, Withholding Returns Section, 
Washington 25, D.C., United States of America.