§ 509.117 Dividends and interest paid by a foreign corporation.

(a) [Reserved]

(b) Exemption from United States tax. Notwithstanding the provisions of paragraph (a) of this section, Article XIV(1) of the convention provides that dividends and interest paid by any foreign corporation and derived by a nonresident alien who is a resident of Switzerland, or by a Swiss corporation, shall not be included in gross income and shall be exempt from United States tax if such alien or corporation at no time during the taxable year in which such items of income are derived has a permanent establishment in the United States. The exemption so provided shall apply even though the corporation paying the dividends or interest is a resident foreign corporation at the time of payment and without regard to the percentage of its gross income from sources within the United States.

[T.D. 6149, 20 FR 7587, Oct. 12, 1955; 25 FR 14022, Dec. 31, 1960, as amended by T.D. 8734, 62 FR 53497, Oct. 14, 1997]