‘‘(iv) which maintains records on the 
identity of each person who, at any time 
during the foreign person’s taxable year, 
holds directly 5 percent or more of the 
class of interest described in clause (iii). 
‘‘(B) QUALIFIED
COLLECTIVE
INVEST-
MENT
VEHICLE.—For purposes of this sub-
section, the term ‘qualified collective investment 
vehicle’ means a foreign person— 
‘‘(i) which, under the comprehensive 
income tax treaty described in subpara-
graph (A)(i), is eligible for a reduced rate 
of withholding with respect to ordinary 
dividends paid by a real estate investment 
trust even if such person holds more than 
10 percent of the stock of such real estate 
investment trust, or 
‘‘(ii) which is designated as a qualified 
collective investment vehicle by the Sec-
retary and is either— 
‘‘(I) fiscally transparent within 
the meaning of section 894, or 
‘‘(II) required to include divi-
dends in its gross income, but entitled 
to a deduction for distributions to per-
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sons holding interests (other than in-
terests solely as a creditor) in such 
foreign person.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 897(c)(1)(A) is amended by in-
serting ‘‘or subsection (k)’’ after ‘‘subparagraph 
(B)’’ in the matter preceding clause (i). 
(B) Section 857(b)(3)(F) is amended by 
inserting ‘‘or section 897(k)(2)(A)(ii)’’ after 
‘‘897(h)(1)’’. 
(b) DETERMINATION OF DOMESTIC CONTROL.— 
(1) SPECIAL OWNERSHIP RULES.— 
(A) IN
GENERAL.—Section 897(h)(4) is 
amended by adding at the end the following 
new subparagraph: 
‘‘(E) SPECIAL
OWNERSHIP
RULES.—For 
purposes of determining the holder of stock 
under subparagraphs (B) and (C)— 
‘‘(i) in the case of any class of stock 
of the qualified investment entity which is 
regularly traded on an established securi-
ties market in the United States, a person 
holding less than 5 percent of such class of 
stock at all times during the testing period 
shall be treated as a United States person 
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unless the qualified investment entity has 
actual knowledge that such person is not a 
United States person, 
‘‘(ii) any stock in the qualified invest-
ment entity held by another qualified in-
vestment entity— 
‘‘(I) any class of stock of which 
is regularly traded on an established 
securities market, or 
‘‘(II) which is a regulated invest-
ment company which issues redeem-
able securities (within the meaning of 
section 2 of the Investment Company 
Act of 1940), 
shall be treated as held by a foreign per-
son, except that if such other qualified in-
vestment entity is domestically controlled 
(determined after application of this sub-
paragraph), such stock shall be treated as 
held by a United States person, and 
‘‘(iii) any stock in the qualified invest-
ment entity held by any other qualified in-
vestment entity not described in subclause 
(I) or (II) of clause (ii) shall only be treat-
ed as held by a United States person in 
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proportion to the stock of such other quali-
fied investment entity which is (or is treat-
ed under clause (ii) or (iii) as) held by a 
United States person.’’. 
(B) 
CONFORMING
AMENDMENT.—The 
heading for paragraph (4) of section 897(h) is 
amended by inserting ‘‘AND SPECIAL RULES’’ 
after ‘‘DEFINITIONS’’. 
(2) TECHNICAL
AMENDMENT.—Clause (ii) of 
section 897(h)(4)(A) is amended by inserting ‘‘and 
for purposes of determining whether a real estate in-
vestment trust is a domestically controlled qualified 
investment entity under this subsection’’ after ‘‘real 
estate investment trust’’. 
(c) EFFECTIVE DATES.— 
(1) IN GENERAL.—The amendments made by 
subsection (a) shall take effect on the date of enact-
ment and shall apply to— 
(A) any disposition on and after the date 
of the enactment of this Act, and 
(B) any distribution by a real estate in-
vestment trust on or after the date of the en-
actment of this Act which is treated as a deduc-
tion for a taxable year of such trust ending 
after such date. 
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(2) DETERMINATION OF DOMESTIC CONTROL.— 
The amendments made by subsection (b)(1) shall 
take effect on the date of the enactment of this Act. 
(3) TECHNICAL AMENDMENT.—The amendment 
made by subsection (b)(2) shall take effect on Janu-
ary 1, 2015. 
SEC. 3. EXCEPTION FOR INTERESTS HELD BY FOREIGN RE-
TIREMENT OR PENSION FUNDS. 
(a) IN GENERAL.—Section 897, as amended by sec-
tion 2, is amended by adding at the end the following new 
subsection: 
‘‘(l) EXCEPTION FOR INTERESTS HELD BY FOREIGN 
PENSION FUNDS.— 
‘‘(1) IN GENERAL.—This section shall not apply 
to any United States real property interest held 
by— 
‘‘(A) a qualified foreign pension fund, or 
‘‘(B) any entity all of the interests of 
which are held by a qualified foreign pension 
fund. 
‘‘(2) QUALIFIED
FOREIGN
PENSION
FUND.— 
For purposes of this subsection, the term ‘qualified 
foreign pension fund’ means any trust, corporation, 
or other organization or arrangement— 
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‘‘(A) which is created or organized under 
the law of a country other than the United 
States, 
‘‘(B) which is established to provide retire-
ment or pension benefits to participants or 
beneficiaries that are current or former employ-
ees (or persons designated by such employees) 
of one or more employers in consideration for 
services rendered, 
‘‘(C) which does not have a single partici-
pant or beneficiary with a right to more than 
five percent of its assets or income, 
‘‘(D) which is subject to government regu-
lation and provides annual information report-
ing about its beneficiaries to the relevant tax 
authorities in the country in which it is estab-
lished or operates, and 
‘‘(E) with respect to which, under the laws 
of the country in which it is established or oper-
ates— 
‘‘(i) contributions to such trust, cor-
poration, organization, or arrangement 
which would otherwise be subject to tax 
under such laws are deductible or excluded 
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from the gross income of such entity or 
taxed at a reduced rate, or 
‘‘(ii) taxation of any investment in-
come of such trust, corporation, organiza-
tion or arrangement is deferred or such in-
come is taxed at a reduced rate. 
‘‘(3) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or ap-
propriate to carry out the purposes of this sub-
section.’’. 
(b) EXEMPTION
FROM
WITHHOLDING.—Section 
1445(f)(3) is amended by striking ‘‘any person’’ and all 
that follows and inserting the following: ‘‘any person other 
than— 
‘‘(A) a United States person, and 
‘‘(B) except as otherwise provided by the 
Secretary, an entity with respect to which sec-
tion 897 does not apply by reason of subsection 
(l) thereof.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to dispositions and distributions 
after the date of the enactment of this Act. 
Æ 
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