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Rev. Rul. 57-391


Rev. Rul. 57-391; 1957-2 C.B. 606

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Citations: Rev. Rul. 57-391; 1957-2 C.B. 606

Obsoleted by T.D. 8734 Superseded by Rev. Rul. 60-288

Rev. Rul. 57-391

There is set forth below a revised table for withholding of tax at the source, in the case of nonresident alien individuals and nonresident foreign corporations, incident to the administration of the several income tax conventions to which the United States is a party. This table supersedes that which appeared in Revenue Ruling 54-475, C.B. 1954-2, 11, as modified by Revenue Ruling 55-482, C.B. 1955-2, 316

The exemptions from, or reduced rates of, United States tax, varying as between countries and as to specific items of income, require withholding agents to consult, before disbursement of such income, the provisions of the Treasury Decision applicable to the country of the taxpayer (nonresident of the United States) to whom the payment is being made. The table has been confined to dividends, interest, royalties, and real estate rentals, which, with few exceptions, include practically all income subject to withholding under sections 1441 and 1442 of the Internal Revenue Code of 1954.

 Rates of United States tax to be withheld at the source in the case

 

 of nonresident aliens and nonresident foreign corporations pursuant

 

 to existing income tax conventions.

 

 

        Country          Dividends        Interest /1   Royalties 1

 

 

 Australia------------        4 15%              NE        2 /3/ E

 

 Belgium--------------        3 15%          3 NE            3 E

 

 Canada---------------    3 /5/ 15%         3 15%     3 /13/ 15%

 

 Denmark--------------    3 /5/ 15%           3 E            8 E

 

 Finland--------------    3 /5/ 15%           3 E            8 E

 

 France---------------    3 /*/ 15%     3 /*/ 15%            3 E

 

 

 Germany--------------   3 /15/ 15%      3 /16/ E            8 E

 

 Greece---------------             NE       3 /6/ E       3 /11/ E

 

 Honduras-------------             NE           3 E            3 E

 

 Ireland--------------    4 /5/ 15%       4 /6/ E            4 E

 

 Italy----------------    3 /5/ 15%              NE            3 E

 

 Japan----------------             NE         3 15%          3 15%

 

 Netherlands----------    3 /5/ 15%       3 /7/ E            3 E

 

 Netherlands Ant------    3 /6/ 15%       3 /7/ E            3 E

 

 New Zealand----------    3 /6/ 15%              NE          10 NE

 

 Norway---------------             NE           3 E            8 E

 

 South Africa---------             NE              NE               NE

 

 Sweden---------------       14 10%              NE           14 E

 

 Switzerland----------    8 /5/ 15%          8 5%            6 E

 

 United Kingdom-------    6 /8/ 15%       4 /6/ E            4 E

 

 

                         Real estate

 

                         rentals and

 

       Country             natural       Applicable Treasury Decisions

 

                          resource

 

                          royalties

 

 

 Australia-------------       8 NE    6108, C.B. 1954-2, 614.

 

 Belgium---------------       8 NE    6056, C.B. 1954-1, 132.

 

 Canada----------------  3 /9/ 15%    6047, C.B. 1953-2, 59.

 

 Denmark---------------       8 NE    5692, C.B. 1949-1, 104.

 

 Finland--------------        8 NE    6030, C.B. 1953-2, 185.

 

 France---------------        8 NE    5499, C.B. 1946-1, 134 (as to

 

                                          royalties only).

 

 Germany---------------       8 NE    6122, C.B. 1955-1, 641.

 

 Greece----------------       8 NE    6109, C.B. 1954-2 638.

 

 Honduras--------------       8 NE    6264, page 1040 this Bulletin.

 

 Ireland---------------  4 /9/ 15%    5897, C.B. 1952-1, 89.

 

 Italy-----------------       8 NE    6215, I.R.B. 1956-50, 30.

 

 Japan-----------------       8 NE    6130, C.B. 1955-1, 665.

 

 Netherlands-----------       8 NE    5690, C.B. 1949-1, 92.

 

 Netherlands Ant-------       8 NE    6153, C.B. 1955-2, 777.

 

 New Zealand-----------      10 NE    5957, C.B. 1953-1, 238.

 

 Norway----------------       8 NE    5956, C.B. 1953-1, 228.

 

 South Africa----------       8 NE    None issued. 12

 

 Sweden----------------           NE    4975, C.B. 1940-2 43.

 

 Switzerland-----------       8 NE    5867, C.B. 1951-2, 75.

 

 United Kingdom--------  4 /9/ 15%    5532, C.B. 1946-2, 73.

 

 

 Definitions:

 

      E = Exempt.

 

      NE = Not exempt.--Tax to be withheld at the statutory rate

 

 prescribed by sections 1441 and 1442 of the Internal Revenue Code of

 

 1954.

 

 

 References:

 

      1 Except interest on tax-free covenant bonds issued before

 

 January 1, 1934, as to which the obligor has assumed liability for

 

 tax greater than 2 percent of such interest.

 

      2 Copyright royalties only.

 

      3 Applicable if no permanent establishment in United States.

 

      4 Applicable if no permanent establishment in United States

 

 and subject to United Kingdom (or Irish or Australian) tax.

 

      5 The rate is 5 percent on dividends paid by domestic

 

 subsidiary corporation subject to prescribed conditions.

 

      6 Does not apply to interest paid by controlled corporation.

 

      7 Does not apply to interest paid by controlled corporation

 

 nor to interest on mortgages secured on real estate.

 

      8 Recipient may elect to be subject to tax on a net basis by

 

 filing Form 1040B.

 

      9 Recipient may elect to be subject to tax on a net basis but

 

 only on real property by filing Form 1040B.

 

      10 No exemption except motion picture film rentals; net basis

 

 tax elective (on filing Form 1040B) on real property rentals, natural

 

 resource royalties, and industrial royalties (other than film

 

 rentals).

 

      11 Does not apply to motion picture film rentals or royalties.

 

      12 See the Income Tax Convention between the United States and

 

 the Union of South Africa effective July 1, 1946, appearing in

 

 Cumulative Bulletin 1954-2, 651, 655.

 

      13 Copyright royalties are exempt from tax and withholding

 

 provided the taxpayer has no permanent establishment in the United

 

 States.

 

      14 Applicable whether or not engaged in trade or business in

 

 United States.

 

      15 Applies only if the German company deriving dividend owns

 

 at least 10 percent of voting stock of the domestic corporation

 

 paying dividend.

 

      16 Not applicable to interest on debts secured by mortgages on

 

 firms, timberlands, or real property used wholly or partly for

 

 housing purposes.

 

      /*/ Supplemental Convention of June 22, 1956, finalized June 13,

 

 1957.

 

 

The exemptions from, or reductions in rate of, United States tax set forth above with respect to interest, royalties, real property rentals and natural resource royalties are applied at the source upon filing, by the payee of the income, with the withholding agent in the United States, of the appropriate certificate (or letter, as the case may be) as prescribed by regulations (Treasury Decisions cited above).

The reduced rates in the case of dividends (other than those with respect to which the rate of five percent is claimed) is applicable at the source in every case in which the address of the stockholder on the records of the disbursing entity paying the dividend (or on those of the domestic agent receiving such dividend on behalf of the nonresident alien individual or nonresident foreign corporation) is in the foreign country concerned. The reduced rate of five percent is applicable only where the Commissioner determines, and so notifies the paying corporation, that such reduced rate applies.

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