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Rev. Rul. 60-288

Rev. Rul. 60-288; 1960-2 C.B. 265

Citations: Rev. Rul. 60-288; 1960-2 C.B. 265

Obsoleted by T.D. 8734 Clarified by Rev. Rul. 66-55

Rev. Rul. 60-288

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 the table which appears in Revenue Ruling 57-391, C.B. 1957-2, 606.

The exemptions from, or reduced rates of, United States tax, varying as between countries and so 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 section 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





                                                   estate   Applicable


                                                   rentals   Treasury


 Country     Dividends Interest   Royalties       natural   Decisions


                        1                       resource






 Australia   15%/4/    NE          E/2,3/         NE/8/     6108, C.B.






 Austria     15%/3,5/  E/3,17,24/  E/3,11,18,25/  NE/8/     6322, C.B.






 Belgium/23/ 15%/3/    15%/3/      E/3/           NE/8/     6056, C.B.






 Canada      15%/3,5/  15%/3/      15%/3,13/      15%/3,9/  6047, C.B.






 Denmark     15%/3,5/  E/3/        E/3/           NE/8/     5692, C.B.






 Finland     15%/3,5/  E/3/        E/3,11/        NE/8/     6030, C.B.






 France      15%/3/    15%/3/      E/3/           NE/8/     6273, C.B.






 Germany     15%/3,15/ E/3,16/     E/3/           NE/8/     6122, C.B.






 Greece      NE        E/3,6/      E/3,11/        NE/8/     6109, C.B.






 Honduras    NE        E/3/        E/3/           NE/8/     6264, C.B.






 Ireland     15%/4,5/  E/4,6/      E/4/           15%/4,8/  5897, C.B.






 Italy       15%/3,5/  NE          E/3/           NE/8/     6215, C.B.






 Japan       NE        15%3/5/     15%/3/         NE/8/     6130, C.B.






 Netherlands 15%/3,5/  E/3,7/      E/3/           NE/8/     5690, C.B.






 Netherlands 15%/3,5/  E/3,7/      E/3/           NE/8/     6153, C.B.


  Ant                                                       1955-2,




 New Zealand 15%/3/5/  NE          NE/10/         NE/10/    5957, C.B.






 Norway      15%/3/6/  E/3/        E/3/           NE/8/     5956, C.B.






 Pakistan    15%/3,19/ NE          E/3,11,25/     NE        6431, C.B.






 South       NE        NE          NE             NE/8/     None is-


  Africa                                                    sued./12/


 Sweden      10%/14/   NE          E/14/          NE        4975, C.B.






 Switzerland 15%/3,6/  5%/3/       E/3/           NE/8/     5867, C.B.






 United      15%/4,5/  E/4,6/      E/26/          15%/4,8/  5532, C.B.


 Kingdom                                                    1946-2,




 United      15%/4,5/  E/4,6,21/   E/26/          15%/4,8/  6437, C.B.


  Kingdom                                                   1960-1,


  Colonies/20/                                              767.









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


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








      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 tax of the other contracting party.



      5 The rate is five 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





      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





      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





      16 Not applicable to interest on debts secured by mortgages on


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


 housing purposes.



      17 Not applicable to interest on debts secured by mortgages.



      18 Motion picture film rentals are taxed at a rate of 10





      19 Applies only to a Pakistan company owning shares carrying


 more than 50 percent of the voting power in the United States


 corporation paying the dividend.



      20 Applicable to the following Overseas Territories of the


 United Kingdom: Aden, Antigua, Barbados, British Honduras, Cyprus,


 Dominica, Falkland Islands, Gambia, Grenada, Jamaica, Montserrat,


 Nigeria, Federation of Rhodesia and Nyasaland, Federation of St.


 Christopher, Nevis, and Anguilla, St. Lucia, St. Vincent, Seychelles,


 Sierra Leone, Trinidad and Tobago, and the Virgin Islands.



      21 Applies only to the Federation of Rhodesia and Nyasaland.



      22 Revised withholding regulations in process.



      23 Applicable to the Trust Territory of Ruanda-Urundi as per


 Treasury Decisions 6438, C.B. 1960-1, 739, and 6469, C.B. 1960-1,


 752. The question as to whether the Convention now applies to the new


 state of Congo has not been resolved.



      24 The interest exempted shall be an amount not exceeding fair


 and reasonable consideration on indebtedness.



      25 The royalty exempted shall be an amount not exceeding fair


 and reasonable consideration.



      26 Applicable if subject to tax of the other contracting party


 and if no permanent establishment in the United States or if the


 royalty is not directly associated with the business carried on


 through a permanent establishment in the United States.



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 rate 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 of Internal Revenue determines, and so notifies the paying corporation, that such reduced rate applies.

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