§ 520.112 - Wages, salaries and similar compensation, pensions and life annuities.

(a) Under Article X of the convention, wages, salaries and similar compensation and pensions paid by Sweden or by a political subdivision thereof to individuals temporarily residing in the United States are exempt from Federal income tax. By reason, however, of the application of Article XIV(a) of the convention, such exemption does not apply to recipients of such income who are either citizens of the United States or aliens resident therein. As to who are resident aliens, see Regulations 103 (26 CFR 1938 ed. Supps. 19.211-2 to 19.211-4), [Regulations 111 (26 CFR 1949 ed. Supps. 29.211-2 to 29.211-4) and Regulations 118 (§§ 39.211-2 to 39.211-4, 26 CFR, Rev. 1953, Parts 1-79, and Supps.)]. As to the taxation generally of the compensation of employees of foreign governments, see section 116(h) of the Internal Revenue Code and Regulations 103 (26 CFR 1938 ed. Supps. 19.116-2), [Regulations 111 (26 CFR 1949 ed. Supps. 29.116-2) and Regulations 118 (§ 39.116-2, 26 CFR Rev. 1953, Parts 1-79, and Supps.)].

(b) Under the provisions of the same article of the convention, private pensions and life annuities derived from sources within the United States by nonresident alien individuals residing in Sweden are exempt from the Federal income tax. Such items of income are, therefore, not subject to the withholding provisions of the Internal Revenue Code. See paragraph 5 of the protocol to the convention as to what constitutes life annuities. See also § 520.109 with respect to patent and copyright royalties as to requirements necessary to avoid withholding of the tax at the source, which requirements are here also applicable.