§ 521.6 - Release of excess tax withheld at source.

(a) General. (1) In order to bring the convention into force and effect at the earliest practicable date:

(i) The reduced rate of tax of 15 percent to be withheld at the source on dividends, and

(ii) Exemption from tax otherwise withheld at the source on interest, patent royalties, copyright royalties, film rentals and the like,

are hereby made effective beginning January 1, 1948 in any case in which such dividends, interest, patent royalties, copyright royalties, film rentals and the like are derived from sources within the United States by a nonresident alien including a nonresident alien individual, fiduciary and partnership who is a resident of Denmark, or a Danish corporation.

(2) Accordingly, in the case of dividends paid to a nonresident alien (including a nonresident alien individual, fiduciary, and partnership) whose address at the time of payment was in Denmark, or to a Danish corporation whose address at the time of payment was in Denmark, where tax at the rate of 30 percent has been withheld on or after January 1, 1948, from dividends, there shall be released by the withholding agent and paid over to the person from whom it was withheld an amount equal to 15 percent of such dividends.

(3) In the case of every such taxpayer who furnishes to the withholding agent Form 1001-D, as prescribed in § 521.3 or 521.4, where tax at the rate of 30 percent has been withheld on or after January 1, 1948, there shall be released by the withholding agent and paid over to the person from whom withheld an amount equal to the amount so withheld in the case of interest (as to coupon bond interest, see paragraph (4) of this paragraph), patent royalties, copyright royalties, film rentals and the like.

(4) In the case of every such taxpayer who furnishes to the withholding agent Form 1001-D, in duplicate, where tax at the rate of 28 percent or 30 percent, as the case may be, has been withheld on or after January 1, 1948, from coupon bond interest, there shall be released by the withholding agent and paid over to the person from whom it was withheld an amount equal to the tax withheld from such interest. Form 1001-D used for this purpose should be clearly marked “Substitute” in order to replace Forms 1001 previously filed. One Form 1001-D, in duplicate, may be used to replace two or more Forms 1001. The form marked “Substitute” is to be used solely for the release of excess tax withheld in 1948. The use of Form 1001-D for the purpose of exemption upon presentation of interest coupons is set forth in § 521.3 (b).

(b) Private pensions and life annuities paid in 1948 or subsequent years. (1) In order to bring the convention into force and effect at the earliest practicable date, the exemption from tax otherwise withheld at the source on private pensions and life annuities is made effective beginning January 1, 1948, in any case in which such pensions and life annuities are derived from sources within the United States by a nonresident alien individual who is a resident of Denmark.

(2) The person paying such income should be notified by letter from the resident of Denmark that the income is exempt from taxation under the provisions of Article X(2) of the convention. See § 521.5. Such letter will constitute authorization to the payor of the income to release the tax withheld on or after January 1, 1948, with respect to such pensions or life annuities.

(c) Subsidiary's dividends. With respect to a dividend paid on or after January 1, 1948, by a domestic corporation to a Danish corporation whose address is in Denmark, tax shall be withheld in accordance with the provisions of § 521.2 unless prior to the date of payment of such dividend the Commissioner of Internal revenue has notified the paying corporation that such dividend falls within the scope of Article VI (3) of the convention. As soon as practicable after information required under § 521.2 (b) is filed, the Commissioner of Internal Revenue will determine whether the dividend involved falls within the scope of Article VI (3) and may authorize the release of the excess tax withheld with respect to dividends which come within the scope of such provision.