Monday, July 12, 2004

The IRS today issued Rev. Rul. 2004-76, which provides guidance regarding the determination of the applicable tax treaty in the case of corporations that would otherwise be treated as residents of two foreign countries. Here is the description from the accompanying announcement (JS-1779):

The guidance addresses the application of U.S. tax treaty provisions to a foreign corporation that would be a resident of two foreign countries in circumstances in which a tax treaty between those two countries treats the corporation as a resident of one country but not the other country. The revenue ruling makes clear that the foreign corporation will be treated as a resident for U.S. tax treaty purposes only of the country to which residence has been assigned under the tax treaty between the two foreign countries. Accordingly, the foreign corporation will not be entitled to claim the benefits of the tax treaty between the United States and the country to which residence is not assigned under the treaty between the two foreign countries. However, the foreign corporation will be entitled to claim the benefits of the tax treaty between the United States and the country to which residence is assigned, provided that it satisfies any limitation on benefits provision and other applicable requirements of the treaty.