[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: 26CFR521.103]

[Page 146-147]
 
                       TITLE 26--INTERNAL REVENUE
 
     CHAPTER 1--INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY 
                               (Continued)
 
PART 521--DENMARK--Table of Contents
 
                       Subpart--General Income Tax
 
Sec. 521.103  Scope of the convention.

    (a) The primary purposes of the convention, to be accomplished on a 
reciprocal basis, are to avoid double taxation upon major items of 
income derived from sources in one country by persons resident in, or by 
corporations of, the other country, and to provide for administrative 
cooperation between the competent tax authorities of the two countries 
looking to the avoidance of double taxation and fiscal evasion.
    (b) The specific classes of income from sources within the United 
States exempt under the convention from United States tax for taxable 
years beginning on and after January 1, 1948, are:
    (1) Industrial and commercial profits of a Danish enterprise having 
no permanent establishment in the United States (Article III);
    (2) Income derived by a nonresident alien who is a resident of 
Denmark, or by a Danish corporation, from the operation of ships or 
aircraft registered in Denmark (Article V);
    (3) Interest and royalties (including motion picture film rentals) 
derived by a nonresident alien who is a resident of Denmark or by a 
Danish corporation if such alien or corporation has no permanent 
establishment in the United States (Articles VII and VIII);
    (4) Compensation and pensions paid by Denmark to aliens for services 
rendered to Denmark (Article X(1));
    (5) Private pensions and life annuities derived by nonresident alien 
individuals residing in Denmark (Article X(2));
    (6) Compensation, subject to certain limitations, for personal 
services derived by a nonresident alien who is a resident of Denmark 
(Article XI);
    (7) Remittances from sources outside the United States received in 
the United States by a Danish citizen who is temporarily present in the 
United States for the purposes of study or for acquiring business 
experience, such remittances being for the purpose of his maintenance or 
studies (Article XIII);
    (8) Remuneration derived from teaching in the United States for a 
period of not more than two years by a professor or teacher who is a 
resident of Denmark but who is temporarily present in the United States 
(Article XIV).
    (c) The convention also reduces to 15 percent the rate of tax 
otherwise imposed upon dividends derived by a nonresident alien who is a 
resident of Denmark, or by a Danish corporation, if such alien or 
corporation has no permanent establishment in the United States (Article 
VI).

[[Page 147]]

    (d) As to exemption from withholding of the tax at the source in the 
case of interest, royalties, pensions and life annuities, and reduction 
in the rate of tax from 30 percent to 15 percent in the case of 
dividends, see Treasury Decision 5692, approved March 8, 1949 
(Secs. 521.1 to 521.8).
    (e) The convention does not affect the liability to United States 
income taxation of citizens of Denmark who are residents of the United 
States except that such individuals are entitled to the benefits of 
Article XV (relating to credit for Danish income tax), and of Article 
XVI (relating to equality of taxation). Except as provided in Article 
XV, relating to the credit for income tax, the convention does not 
affect taxation by the United States of a citizen of the United States 
or of a domestic corporation, even though such citizen is resident in 
Denmark and such corporation is engaged in trade or business in Denmark.

    Effective Date Note: By T.D. 8732, 62 FR 53498, Oct. 14, 1997, 
Sec. 521.103 was amended by removing and reserving paragraph (d), 
effective Jan. 1, 1999. By T.D. 8804, 63 FR 72183, Dec. 31, 1998, the 
effective date was delayed until Jan. 1, 2000. By T.D. 8856, 64 FR 
73408, Dec. 30, 1999, the effective date was delayed until Jan. 1, 2001.