U.S. Income Taxation of Foreign Governments, International Organizations, Central Banks, and Their Employees (Portfolio 6520)

Description

Bloomberg Tax Portfolio, U.S. Income Taxation of Foreign Governments, International Organizations, Central Banks, and Their Employees, No. 6520, discusses primarily the income tax exemptions under §892, §893 and §895. The Portfolio explores the development of the exemption under §892(a) for foreign governments, particularly the limitations placed on the scope of the exemption by the 1986 Tax Reform Act and by the 1988 temporary regulations and the clarifications (and liberalization) of existing rules by the 2011 proposed regulations. It analyzes in detail what types of organizations are exempt from tax and what kinds of income received by such organizations are exempt from tax. There is an extensive analysis of the issues raised by the regulations under §892 and the ambiguities still present in the law. Tax planning suggestions are also presented and analyzed. It further explores the broader income tax exemption available to certain international organizations under §892(b).

The Portfolio also discusses §893, which exempts employees of foreign governments and international organizations from income tax, and §895, which exempts foreign central banks from income tax. It also raises the possibility of exemption through income tax treaties, other international agreements, and other Code provisions, including §897(l), introduced and effective in late 2015, which exempts from the application of §897 U.S. real property interests held, as well as distributions from real estate investment trusts received, by qualified foreign pension funds and entities wholly owned by such funds.

This Portfolio may be cited as Nikravesh, 6520 T.M., U.S. Income Taxation of Foreign Governments, International Organizations, Central Banks, and Their Employees.

Table of Contents

I. Introduction
II. Exemption from U.S. Income Taxation of Foreign Governments and International Organizations Under §892
III. Exemption from U.S. Income Taxation of Compensation of Employees of Foreign Governments and International Organizations Under §893
IV. Exemption from U.S. Income Taxation of Foreign Central Banks Under §895
V. Other Exemption Possibilities