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Title 26 — Internal Revenue CodeRelease 119-73

§895 Income derived by a foreign central bank of issue from obligations of the United States or from bank deposits

Title 26 › Subtitle Subtitle A— - Income Taxes › Chapter CHAPTER 1— - NORMAL TAXES AND SURTAXES › Subchapter Subchapter N— - Tax Based on Income From Sources Within or Without the United States › Part PART II— - NONRESIDENT ALIENS AND FOREIGN CORPORATIONS › Subpart Subpart D— - Miscellaneous Provisions › § 895

Last updated Apr 6, 2026|Official source

Summary

Foreign central banks' income from U.S. government or agency obligations (including certain Fannie Mae instruments under 12 U.S.C. 1717) or from interest on deposits is exempt from U.S. tax unless assets are used for commercial banking or other business. The Bank for International Settlements is treated as such.

Full Legal Text

Title 26, §895

Internal Revenue Code — Source: USLM XML via OLRC

Income derived by a foreign central bank of issue from obligations of the United States or of any agency or instrumentality thereof (including beneficial interests, participations, and other instruments issued under section 302(c) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717)) which are owned by such foreign central bank of issue, or derived from interest on deposits with persons carrying on the banking business, shall not be included in gross income and shall be exempt from taxation under this subtitle unless such obligations or deposits are held for, or used in connection with, the conduct of commercial banking functions or other commercial activities. For purposes of the preceding sentence the Bank for International Settlements shall be treated as a foreign central bank of issue.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

1966—Pub. L. 89–809 exempted income derived from obligations of agencies or instrumentalities of the United States and income derived from interest on deposits with persons carrying on the banking business, inserted “(including beneficial interests, participations, and other instruments issued under section 302(c) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717)),” and inserted sentence requiring the Bank for International Settlements to be treated as a foreign central bank of issue.

Statutory Notes and Related Subsidiaries

Effective Date

of 1966 AmendmentAmendment by Pub. L. 89–809 applicable with respect to taxable years beginning after Dec. 31, 1966, except that in applying section 864(c)(4)(B)(iii) of this title with respect to a binding contract entered into on or before Feb. 24, 1966, activities in the United States on or before such date in negotiating or carrying out such contract shall not be taken into account, see section 102(e)(1) of Pub. L. 89–809, set out as a note under section 861 of this title.

Effective Date

Pub. L. 87–29, § 1(c), May 4, 1961, 75 Stat. 64, provided that: “The

Amendments

made by subsections (a) and (b) [enacting this section and amending analysis preceding section 891 of this title] shall be effective with respect to income received in taxable years beginning after December 31, 1960.”

Reference

Citations & Metadata

Citation

26 U.S.C. § 895

Title 26 — Internal Revenue Code

Last Updated

Apr 6, 2026

Release point: 119-73