T.D. 9433

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Internal Revenue Bulletin:

2008-50 December 15, 2008

T.D. 9433

Classification of Certain Foreign Entities



Internal Revenue Service (IRS), Treasury.


Final regulations and removal of temporary regulations.


This document contains final regulations relating to certain business entities included on the list of foreign business entities that are always classified as corporations for Federal tax purposes. The regulations are needed to make the Federal tax classification of the Bulgarian public limited liability company (aktsionerno druzhestvo) consistent with the Federal tax classification of public limited liability companies organized in other countries of the European Economic Area. The regulations will affect persons owning an interest in a Bulgarian aktsionerno druzhestvo on or after January 1, 2007.


Effective Date: These regulations are effective on November 28, 2008.

Applicability Date: For the dates of applicability of these regulations, see §301.7701-2(e)(7).


S. James Hawes, (202) 622-3860 (not a toll-free number).



On March 21, 2008, the IRS and Treasury Department published in the Federal Register temporary regulations (T.D. 9388, 2008-17 I.R.B. 832 [73 FR 15064]) and a notice of proposed rulemaking (REG-143468-07, 2008-17 I.R.B. 848 [73 FR 15107]) under section 7701 of the Internal Revenue Code (Code). The regulations added the Bulgarian aktsionerno druzhestvo to the list of entities in §301.7701-2(b)(8) (the per se corporation list). For further background, see T.D. 9388 and Notice 2007-10, 2007-4 I.R.B. 354.

On October 8, 2001, the Council of the European Union adopted Council Regulation 2157/2001 (2001 Official Journal of the European Communities, L 294/1) (the EU Regulation) permitting the organization of a new public limited liability company, the Societas Europaea (SE). The EU Regulation entered into force on October 8, 2004. The general rules for the formation and operation of an SE provided by the EU Regulation are supplemented by the laws of the member country in which the SE has its registered office. On December 16, 2005, the IRS and Treasury Department published final regulations in the Federal Register (T.D. 9235, 2006-1 C.B. 338) adding the SE to the per se corporation list. The preamble to T.D. 9388 stated incorrectly that the aktsionerno druzhestvo is Bulgaria’s SE. In fact, the aktsionerno druzhestvo is a public limited liability company organized in Bulgaria. The IRS and Treasury Department continue to study issues related to the residence of an SE for application of relevant Federal income tax provisions, such as the same-country exception under section 954(c)(3) of the Code. Comments are requested.

Explanation of Provisions

No written comments were received from the public or the Small Business Administration on the temporary or proposed regulations. No public hearing was requested or held. Accordingly, these regulations finalize the proposed regulations without modification and remove the text of the temporary regulations from the Code of Federal Regulations.

Special Analyses

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. Chapter 5) does not apply to these regulations. Because the regulations do not impose a collection of information requirement on small entities, the Regulatory Flexibility Act (5 U.S.C. Chapter 6) does not apply either. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Adoption of Amendments to the Regulations

Accordingly, 26 CFR part 301 is amended as follows:


Paragraph 1. The authority citation for part 301 continues to read in part as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 301.7701-2 is amended by:

1. Adding an entry in alphabetical order to paragraph (b)(8)(i).

2. Removing paragraph (b)(8)(vi).

3. Revising paragraph (e)(7).

The revisions and addition read as follows:

§301.7701-2 Business entities; definitions. * * * * *

(b) * * *

(8) * * *

(i) * * *

Bulgaria, Aktsionerno Druzhestvo.

* * * * *

(e) * * *

(7) The reference to the Bulgarian entity in paragraph (b)(8)(i) of this section applies to such entities formed on or after January 1, 2007, and to any such entity formed before such date from the date that, in the aggregate, a 50 percent or more interest in such entity is owned by any person or persons who were not owners of the entity as of January 1, 2007. For purposes of the preceding sentence, the term interest means—

(i) In the case of a partnership, a capital or profits interest; and

(ii) In the case of a corporation, an equity interest measured by vote or value.

§301.7701-2T [Removed]

Par. 3. Section 301.7701-2T is removed.

Linda E. Stiff,
Deputy Commissioner for
Services and Enforcement.

Approved October 31, 2008.

Eric Solomon,
Assistant Secretary of
the Treasury (Tax


(Filed by the Office of the Federal Register on November 26, 2008, 8:45 a.m., and published in the issue of the Federal Register for November 28, 2008, 73 F.R. 72345)

Drafting Information

The principal author of these regulations is S. James Hawes of the Office of Associate Chief Counsel (International); however, other personnel from the IRS and the Treasury Department participated in their development.

* * * * *

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