Title 26, Internal Revenue CodeRelease 119-102
§895 Income Derived by a Foreign Central Bank of Issue From Obligations of the United States or From Bank Deposits
Title 26 › Subtitle A — Income Taxes › CHAPTER 1 — NORMAL TAXES AND SURTAXES › Subchapter N — Tax Based on Income From Sources Within or Without the United States › PART II — NONRESIDENT ALIENS AND FOREIGN CORPORATIONS › Subpart D — Miscellaneous Provisions › § 895
Summary
Income a foreign central bank gets from U.S. obligations or deposit interest is exempt from U.S. tax unless used for commercial purposes. The Bank for International Settlements is treated as such a bank.
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
Aug 21, 2026
Release point: 119-102