Model Agreement, 1996

UNITED STATES MODEL
INCOME TAX CONVENTION OF
SEPTEMBER 20, 1996
CONVENTION BETWEEN
THE UNITED STATES OF AMERICA
AND -------
FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE
PREVENTION OF FISCAL EVASION
WITH RESPECT TO TAXES ON INCOME
The United States of America and -----, desiring to conclude
a Convention for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income,
have agreed as follows:

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Article 1
GENERAL SCOPE
1. This Convention shall apply only to persons who are
residents of one or both of the Contracting States, except as
otherwise provided in the Convention.
2. The Convention shall not restrict in any manner any
benefit now or hereafter accorded:
a) by the laws of either Contracting State; or
b) by any other agreement between the Contracting
States.

3. Notwithstanding the provisions of subparagraph 2(b):
(a) the provisions of Article 25(Mutual Agreement
Procedure) of this Convention exclusively shall apply to any
dispute concerning whether a measure is within the scope of
this Convention, and the procedures under this Convention
exclusively shall apply to that dispute; and
(b) unless the competent authorities determine that a
taxation measure is not within the scope of this Convention,
the nondiscrimination obligations of this Convention exclu-
sively shall apply with respect to that measure, except for
such national treatment or most-favored-nation obligations
as may apply to trade in goods under the General Agreement
on Tariffs and Trade. No national treatment or most-fa-
vored-nation obligation under any other agreement shall
apply with respect to that measure.
(c) For the purpose of this paragraph, a "measure" is
a law, regulation, rule, procedure, decision, administrative
action, or any similar provision or action.
4. Notwithstanding any provision of the Convention except
paragraph 5 of this Article, a Contracting State may tax its
residents (as determined under Article 4 (Residence)), and by
reason of citizenship may tax its citizens, as if the Convention
had not come into effect. For this purpose, the term "citizen"
shall include a former citizen or long-term resident whose loss
of such status had as one of its principal purposes the avoidance

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of tax (as defined under the laws of the Contracting State of
which the person was a citizen or long-term resident), but only
for a period of 10 years following such loss.
5. The provisions of paragraph 4 shall not affect:
a) the benefits conferred by a Contracting State under
paragraph 2 of Article 9 (Associated Enterprises), para-
graphs 2 and 5 of Article 18 (Pensions, Social Security,
Annuities, Alimony, and Child Support), and Articles 23
(Relief From Double Taxation), 24 (Non-Discrimination), and
25 (Mutual Agreement Procedure); and
b) the benefits conferred by a Contracting State under
paragraph 6 of Article 18 (Pensions, Social Security,
Annuities, Alimony, and Child Support), Articles 19
(Government Service), 20 (Students and Trainees), and 27
(Diplomatic Agents and Consular Officers), upon individuals
who are neither citizens of, nor have been admitted for
permanent residence in, that State.

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Article 2
TAXES COVERED
1. The existing taxes to which this Convention shall apply
are:
a) in the United States: the Federal income taxes
imposed by the Internal Revenue Code (but excluding social
security taxes), and the Federal excise taxes imposed with
respect to private foundations.
b) in __________ : ________________________________
____________________________________________________________
____________________.
2. The Convention shall apply also to any identical or
substantially similar taxes that are imposed after the date of
signature of the Convention in addition to, or in place of, the
existing taxes. The competent authorities of the Contracting
States shall notify each other of any significant changes that
have been made in their respective taxation laws or other laws
affecting their obligations under the Convention, and of any
official published material concerning the application of the
Convention, including explanations, regulations, rulings, or
judicial decisions.

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Article 3
GENERAL DEFINITIONS
1. For the purposes of this Convention, unless the context
otherwise requires:
a) the term "person" includes an individual, an estate,
a trust, a partnership, a company, and any other body of
persons;
b) the term "company" means any body corporate or any
entity that is treated as a body corporate for tax purposes
according to the laws of the state in which it is organized;
c) the terms "enterprise of a Contracting State" and
"enterprise of the other Contracting State" mean respective-
ly an enterprise carried on by a resident of a Contracting
State, and an enterprise carried on by a resident of the
other Contracting State; the terms also include an
enterprise carried on by a resident of a Contracting State
through an entity that is treated as fiscally transparent in
that Contracting State;
d) the term "international traffic" means any transport
by a ship or aircraft, except when such transport is solely
between places in a Contracting State;
e) the term "competent authority" means:
(i) in the United States: the Secretary of the
Treasury or his delegate; and
(ii) in ___________: ___________________;
f) the term "United States" means the United States
of America, and includes the states thereof and the District
of Columbia; such term also includes the territorial sea
thereof and the sea bed and subsoil of the submarine areas
adjacent to that territorial sea, over which the United
States exercises sovereign rights in accordance with
international law; the term, however, does not include
Puerto Rico, the Virgin Islands, Guam or any other United
States possession or territory;

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g) the term _________ means _________________;
h) the term "national" of a Contracting State, means:
(i) any individual possessing the nationality or
citizenship of that State; and
(ii) any legal person, partnership or association
deriving its status as such from the laws in force in
that State;
i) the term "qualified governmental entity" means:
(i) any person or body of persons that constitutes
a governing body of a Contracting State, or of a polit-
ical subdivision or local authority of a Contracting
State;
(ii) a person that is wholly owned, directly or
indirectly, by a Contracting State or a political
subdivision or local authority of a Contracting State,
provided (A) it is organized under the laws of the
Contracting State, (B) its earnings are credited to its
own account with no portion of its income inuring to
the benefit of any private person, and (C) its assets
vest in the Contracting State, political subdivision or
local authority upon dissolution; and
(iii) a pension trust or fund of a person de-
scribed in subparagraph (i) or (ii) that is constituted
and operated exclusively to administer or provide
pension benefits described in Article 19;
provided that an entity described in subparagraph (ii) or
(iii) does not carry on commercial activities.
2.As regards the application of the Convention at any
time by a Contracting State any term not defined therein shall,
unless the context otherwise requires, or the competent authori-
ties agree to a common meaning pursuant to the provisions of
Article 25 (Mutual Agreement Procedure), have the meaning which
it has at that time under the law of that State for the purposes
of the taxes to which the Convention applies, any meaning under
the applicable tax laws of that State prevailing over a meaning
given to the term under other laws of that State.

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Article 4
RESIDENCE
1. Except as provided in this paragraph, for the purposes
of this Convention, the term "resident of a Contracting State"
means any person who, under the laws of that State, is liable to
tax therein by reason of his domicile, residence, citizenship,
place of management, place of incorporation, or any other
criterion of a similar nature.
a) The term “resident of a Contracting State” does not
include any person who is liable to tax in that State in
respect only of income from sources in that State or of
profits attributable to a permanent establishment in that
State.
b) A legal person organized under the laws of a
Contracting State and that is generally exempt from tax in
that State and is established and maintained in that State
either:
i) exclusively for a religious, charitable,
educational, scientific, or other similar purpose; or
ii) to provide pensions or other similar benefits
to employees pursuant to a plan
is to be treated for purposes of this paragraph as a resi-
dent of that Contracting State.
c) A qualified governmental entity is to be treated as
a resident of the Contracting State where it is established.
d) An item of income, profit or gain derived through
an entity that is fiscally transparent under the laws of
either Contracting State shall be considered to be derived
by a resident of a State to the extent that the item is
treated for purposes of the taxation law of such Contracting
State as the income, profit or gain of a resident.
2. Where by reason of the provisions of paragraph 1, an
individual is a resident of both Contracting States, then his
status shall be determined as follows:

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a) he shall be deemed to be a resident of the State in
which he has a permanent home available to him; if he has a
permanent home available to him in both States, he shall be
deemed to be a resident of the State with which his personal
and economic relations are closer (center of vital inter-
ests);
b) if the State in which he has his center of vital
interests cannot be determined, or if he does not have a
permanent home available to him in either State, he shall be
deemed to be a resident of the State in which he has an
habitual abode;
c) if he has an habitual abode in both States or in
neither of them, he shall be deemed to be a resident of the
State of which he is a national;
d) if he is a national of both States or of neither of
them, the competent authorities of the Contracting States
shall endeavor to settle the question by mutual agreement.
3. Where by reason of the provisions of paragraph 1 a
company is a resident of both Contracting States, then if it is
created under the laws of one of the Contracting States or a
political subdivision thereof, it shall be deemed to be a
resident of that State.
4. Where by reason of the provisions of paragraph 1 a
person other than an individual or a company is a resident of
both Contracting States, the competent authorities of the Con-
tracting States shall endeavor to settle the question by mutual
agreement and determine the mode of application of the Convention
to such person.

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Article 5
PERMANENT ESTABLISHMENT
1. For the purposes of this Convention, the term "permanent
establishment" means a fixed place of business through which the
business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
a) a place of management;
b) a branch;
c) an office;
d) a factory;
e) a workshop; and
f) a mine, an oil or gas well, a quarry, or any other
place of extraction of natural resources.
3. A building site or construction or installation project,
or an installation or drilling rig or ship used for the explora-
tion of natural resources, constitutes a permanent establishment
only if it lasts or the activity continues for more than twelve
months.
4. Notwithstanding the preceding provisions of this Arti-
cle, the term "permanent establishment" shall be deemed not to
include:
a) the use of facilities solely for the purpose of
storage, display or delivery of goods or merchandise be-
longing to the enterprise;
b) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of stor-
age, display or delivery;
c) the maintenance of a stock of goods or merchandise
belonging to the enterprise solely for the purpose of pro-
cessing by another enterprise;

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d) the maintenance of a fixed place of business solely
for the purpose of purchasing goods or merchandise, or of
collecting information, for the enterprise;
e) the maintenance of a fixed place of business solely
for the purpose of carrying on, for the enterprise, any
other activity of a preparatory or auxiliary character;
f) the maintenance of a fixed place of business solely
for any combination of the activities mentioned in subpara-
graphs a) through e).
5. Notwithstanding the provisions of paragraphs 1 and 2,
where a person -- other than an agent of an independent status to
whom paragraph 6 applies -- is acting on behalf of an enterprise
and has and habitually exercises in a Contracting State an
authority to conclude contracts that are binding on the
enterprise, that enterprise shall be deemed to have a permanent
establishment in that State in respect of any activities that the
person undertakes for the enterprise, unless the activities of
such person are limited to those mentioned in paragraph 4 that,
if exercised through a fixed place of business, would not make
this fixed place of business a permanent establishment under the
provisions of that paragraph.
6. An enterprise shall not be deemed to have a permanent
establishment in a Contracting State merely because it carries on
business in that State through a broker, general commission
agent, or any other agent of an independent status, provided that
such persons are acting in the ordinary course of their business
as independent agents.
7. The fact that a company that is a resident of a Con-
tracting State controls or is controlled by a company that is a
resident of the other Contracting State, or that carries on
business in that other State (whether through a permanent estab-
lishment or otherwise), shall not constitute either company a
permanent establishment of the other.

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Article 6
INCOME FROM REAL PROPERTY (IMMOVABLE PROPERTY)
1. Income derived by a resident of a Contracting State from
real property (immovable property), including income from agri-
culture or forestry, situated in the other Contracting State may
be taxed in that other State.
2. The term "real property (immovable property)" shall have
the meaning which it has under the law of the Contracting State
in which the property in question is situated.
3. The provisions of paragraph 1 shall apply to income
derived from the direct use, letting, or use in any other form of
real property.
4. The provisions of paragraphs 1 and 3 shall also apply to
the income from real property of an enterprise and to income from
real property used for the performance of independent personal
services.
5. A resident of a Contracting State who is liable to tax
in the other Contracting State on income from real property
situated in the other Contracting State may elect for any taxable
year to compute the tax on such income on a net basis as if such
income were business profits attributable to a permanent estab-
lishment in such other State. Any such election shall be binding
for the taxable year of the election and all subsequent taxable
years unless the competent authority of the Contracting State in
which the property is situated agrees to terminate the election.

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Article 7
BUSINESS PROFITS
1. The business profits of an enterprise of a Contracting
State shall be taxable only in that State unless the enterprise
carries on business in the other Contracting State through a
permanent establishment situated therein. If the enterprise
carries on business as aforesaid, the business profits of the
enterprise may be taxed in the other State but only so much of
them as are attributable to that permanent establishment.
2. Subject to the provisions of paragraph 3, where an
enterprise of a Contracting State carries on business in the
other Contracting State through a permanent establishment situat-
ed therein, there shall in each Contracting State be attributed
to that permanent establishment the business profits that it
might be expected to make if it were a distinct and independent
enterprise engaged in the same or similar activities under the
same or similar conditions. For this purpose, the business
profits to be attributed to the permanent establishment shall
include only the profits derived from the assets or activities of
the permanent establishment.
3. In determining the business profits of a permanent
establishment, there shall be allowed as deductions expenses that
are incurred for the purposes of the permanent establishment,
including a reasonable allocation of executive and general
administrative expenses, research and development expenses,
interest, and other expenses incurred for the purposes of the
enterprise as a whole (or the part thereof which includes the
permanent establishment), whether incurred in the State in which
the permanent establishment is situated or elsewhere.
4. No business profits shall be attributed to a permanent
establishment by reason of the mere purchase by that permanent
establishment of goods or merchandise for the enterprise.
5. For the purposes of the preceding paragraphs, the
profits to be attributed to the permanent establishment shall be
determined by the same method of accounting year by year unless
there is good and sufficient reason to the contrary.
6. Where business profits include items of income that are
dealt with separately in other Articles of the Convention, then

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the provisions of those Articles shall not be affected by the
provisions of this Article.
7. For the purposes of the Convention, the term "business
profits" means income from any trade or business, including
income derived by an enterprise from the performance of personal
services, and from the rental of tangible personal property.
8. In applying paragraphs 1 and 2 of Article 7 (Business
Profits), paragraph 6 of Article 10 (Dividends), paragraph 3 of
Article 11 (Interest), paragraph 3 of Article 12 (Royalties),
paragraph 3 of Article 13 (Gains), Article 14 (Independent
Personal Services) and paragraph 2 of Article 21 (Other Income),
any income or gain attributable to a permanent establishment or
fixed base during its existence is taxable in the Contracting
State where such permanent establishment or fixed base is situat-
ed even if the payments are deferred until such permanent estab-
lishment or fixed base has ceased to exist.

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Article 8
SHIPPING AND AIR TRANSPORT
1. Profits of an enterprise of a Contracting State from the
operation of ships or aircraft in international traffic shall be
taxable only in that State.
2. For the purposes of this Article, profits from the
operation of ships or aircraft include profits derived from the
rental of ships or aircraft on a full (time or voyage) basis.
They also include profits from the rental of ships or aircraft on
a bareboat basis if such ships or aircraft are operated in
international traffic by the lessee, or if the rental income is
incidental to profits from the operation of ships or aircraft in
international traffic. Profits derived by an enterprise from the
inland transport of property or passengers within either
Contracting State, shall be treated as profits from the operation
of ships or aircraft in international traffic if such transport
is undertaken as part of international traffic.
3. Profits of an enterprise of a Contracting State from the
use, maintenance, or rental of containers (including trailers,
barges, and related equipment for the transport of containers)
used in international traffic shall be taxable only in that
State.
4. The provisions of paragraphs 1 and 3 shall also apply to
profits from participation in a pool, a joint business, or an
international operating agency.

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Article 9
ASSOCIATED ENTERPRISES
1. Where:
a) an enterprise of a Contracting State participates
directly or indirectly in the management, control or capital
of an enterprise of the other Contracting State; or
b) the same persons participate directly or indirectly
in the management, control, or capital of an enterprise of a
Contracting State and an enterprise of the other Contracting
State,
and in either case conditions are made or imposed between the two
enterprises in their commercial or financial relations that
differ from those that would be made between independent enter-
prises, then, any profits that, but for those conditions, would
have accrued to one of the enterprises, but by reason of those
conditions have not so accrued, may be included in the profits of
that enterprise and taxed accordingly.
2. Where a Contracting State includes in the profits of an
enterprise of that State, and taxes accordingly, profits on which
an enterprise of the other Contracting State has been charged to
tax in that other State, and the other Contracting State agrees
that the profits so included are profits that would have accrued
to the enterprise of the first-mentioned State if the conditions
made between the two enterprises had been those that would have
been made between independent enterprises, then that other State
shall make an appropriate adjustment to the amount of the tax
charged therein on those profits. In determining such adjust-
ment, due regard shall be paid to the other provisions of this
Convention and the competent authorities of the Contracting
States shall if necessary consult each other.

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Article 10
DIVIDENDS
1. Dividends paid by a resident of a Contracting State to a
resident of the other Contracting State may be taxed in that
other State.
2. However, such dividends may also be taxed in the Con-
tracting State of which the payor is a resident and according to
the laws of that State, but if the dividends are beneficially
owned by a resident of the other Contracting State, except as
otherwise provided, the tax so charged shall not exceed:

a) 5 percent of the gross amount of the dividends if
the beneficial owner is a company that owns directly at
least 10 percent of the voting stock of the company paying
the dividends;
b) 15 percent of the gross amount of the dividends in
all other cases.
This paragraph shall not affect the taxation of the company in
respect of the profits out of which the dividends are paid.
3. Subparagraph a) of paragraph 2 shall not apply in the
case of dividends paid by a United States person that is a
Regulated Investment Company or a Real Estate Investment Trust
(REIT). In the case of a United States person that is a REIT,
subparagraph b) of paragraph 2 also shall not apply, unless the
dividend is beneficially owned by an individual holding a less
than 10-percent interest in the REIT.
4. Notwithstanding paragraph 2, dividends may not be taxed
in the Contracting State of which the payor is a resident if the
beneficial owner of the dividends is a resident of the other
Contracting State that is a qualified governmental entity that
does not control the payor of the dividend.
5. For purposes of the Convention, the term "dividends"
means income from shares or other rights, not being debt-claims,
participating in profits, as well as income that is subjected to
the same taxation treatment as income from shares under the laws
of the State of which the payor is a resident.

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6. The provisions of paragraphs 1 and 2 shall not apply if
the beneficial owner of the dividends, being a resident of a Con-
tracting State, carries on business in the other Contracting
State, of which the payor is a resident, through a permanent
establishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein,
and the dividends are attributable to such permanent
establishment or fixed base. In such case the provisions of
Article 7 (Business Profits) or Article 14 (Independent Personal
Services), as the case may be, shall apply.
7. A Contracting State may not impose any tax on dividends
paid by a resident of the other State, except insofar as the
dividends are paid to a resident of the first-mentioned State or
the dividends are attributable to a permanent establishment or a
fixed base situated in that State, nor may it impose tax on a
corporation's undistributed profits, except as provided in
paragraph 8, even if the dividends paid or the undistributed
profits consist wholly or partly of profits or income arising in
that State.
8. A corporation that is a resident of one of the States
and that has a permanent establishment in the other State or that
is subject to tax in the other State on a net basis on its income
that may be taxed in the other State under Article 6 (Income from
Real Property (Immoveable Property)) or under paragraph 1 of
Article 13 (Gains) may be subject in that other State to a tax in
addition to the tax allowable under the other provisions of this
Convention. Such tax, however, may be imposed on only the
portion of the business profits of the corporation attributable
to the permanent establishment and the portion of the income
referred to in the preceding sentence that is subject to tax
under Article 6 (Income from Real Property (Immoveable Property))
or under paragraph 1 of Article 13 (Gains) that, in the case of
the United States, represents the dividend equivalent amount of
such profits or income and, in the case of __________, is an
amount that is analogous to the dividend equivalent amount.
9. The tax referred to in paragraph 8 may not be imposed at
a rate in excess of the rate specified in paragraph 2 a).

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Article 11
INTEREST
1. Interest arising in a Contracting State and beneficially
owned by a resident of the other Contracting State may be taxed
only in that other State.
2. The term "interest" as used in this Convention means
income from debt-claims of every kind, whether or not secured by
mortgage, and whether or not carrying a right to participate in
the debtor's profits, and in particular, income from government
securities and income from bonds or debentures, including premi-
ums or prizes attaching to such securities, bonds or debentures,
and all other income that is subjected to the same taxation
treatment as income from money lent by the taxation law of the
Contracting State in which the income arises. Income dealt with
in Article 10 (Dividends) and penalty charges for late payment
shall not be regarded as interest for the purposes of this
Convention.
3. The provisions of paragraph 1 shall not apply if the
beneficial owner of the interest, being a resident of a Con-
tracting State, carries on business in the other Contracting
State, in which the interest arises, through a permanent estab-
lishment situated therein, or performs in that other State
independent personal services from a fixed base situated therein,
and the interest is attributable to such permanent establishment
or fixed base. In such case the provisions of Article 7 (Busi-
ness Profits) or Article 14 (Independent Personal Services), as
the case may be, shall apply.
4. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some
other person, the amount of the interest, having regard to the
debt-claim for which it is paid, exceeds the amount which would
have been agreed upon by the payer and the beneficial owner in
the absence of such relationship, the provisions of this Article
shall apply only to the last-mentioned amount. In such case the
excess part of the payments shall remain taxable according to the
laws of each State, due regard being had to the other provisions
of this Convention.
5. Notwithstanding the provisions of paragraph 1:

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a) interest paid by a resident of a Contracting State
and that is determined with reference to receipts, sales,
income, profits or other cash flow of the debtor or a
related person, to any change in the value of any property
of the debtor or a related person or to any dividend,
partnership distribution or similar payment made by the
debtor to a related person, and paid to a resident of the
other State also may be taxed in the Contracting State in
which it arises, and according to the laws of that State,
but if the beneficial owner is a resident of the other
Contracting State, the gross amount of the interest may be
taxed at a rate not exceeding the rate prescribed in
subparagraph b) of paragraph 2 of Article 10 (Dividends);
and
b) Interest that is an excess inclusion with respect
to a residual interest in a real estate mortgage investment
conduit may be taxed by each State in accordance with its
domestic law.

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Article 12
ROYALTIES
1. Royalties arising in a Contracting State and beneficial-
ly owned by a resident of the other Contracting State may be
taxed only in that other State.
2. The term "royalties" as used in this Convention means:
(a) any consideration for the use of, or the right to
use, any copyright of literary, artistic, scientific or
other work (including computer software, cinematographic
films, audio or video tapes or disks, and other means of
image or sound reproduction), any patent, trademark, design
or model, plan, secret formula or process, or other like
right or property, or for information concerning industrial,
commercial, or scientific experience; and
(b) gain derived from the alienation of any property
described in subparagraph (a), provided that such gain is
contingent on the productivity, use, or disposition of the
property.
3. The provisions of paragraph 1 shall not apply if the
beneficial owner of the royalties, being a resident of a Con-
tracting State, carries on business in the other Contracting
State through a permanent establishment situated therein, or
performs in that other State independent personal services from a
fixed base situated therein, and the royalties are attributable
to such permanent establishment or fixed base. In such case the
provisions of Article 7 (Business Profits) or Article 14 (Inde-
pendent Personal Services), as the case may be, shall apply.
4. Where, by reason of a special relationship between the
payer and the beneficial owner or between both of them and some
other person, the amount of the royalties, having regard to the
use, right, or information for which they are paid, exceeds the
amount which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the provi-
sions of this Article shall apply only to the last-mentioned
amount. In such case the excess part of the payments shall
remain taxable according to the laws of each Contracting State,
due regard being had to the other provisions of the Convention.

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Article 13
GAINS
1. Gains derived by a resident of a Contracting State that
are attributable to the alienation of real property situated in
the other Contracting State may be taxed in that other State.
2. For the purposes of this Convention the term "real
property situated in the other Contracting State" shall include:
a) real property referred to in Article 6 (Income from
Real Property (Immovable Property));
b) a United States real property interest; and
c) an equivalent interest in real property situated in
_____.
3. Gains from the alienation of personal property that are
attributable to a permanent establishment that an enterprise of a
Contracting State has in the other Contracting State, or that are
attributable to a fixed base that is available to a resident of a
Contracting State in the other Contracting State for the purpose
of performing independent personal services, and gains from the
alienation of such a permanent establishment (alone or with the
whole enterprise) or of such a fixed base, may be taxed in that
other State.
4. Gains derived by an enterprise of a Contracting State
from the alienation of ships, aircraft, or containers operated or
used in international traffic or personal property pertaining to
the operation or use of such ships, aircraft, or containers shall
be taxable only in that State.
5. Gains from the alienation of any property other than
property referred to in paragraphs 1 through 4 shall be taxable
only in the Contracting State of which the alienator is a resi-
dent.

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Article 14
INDEPENDENT PERSONAL SERVICES
1. Income derived by an individual who is a resident of a
Contracting State in respect of the performance of personal
services of an independent character shall be taxable only in
that State, unless the individual has a fixed base regularly
available to him in the other Contracting State for the purpose
of performing his activities. If he has such a fixed base, the
income attributable to the fixed base that is derived in respect
of services performed in that other State also may be taxed by
that other State.
2. For purposes of paragraph 1, the income that is taxable
in the other Contracting State shall be determined under the
principles of paragraph 3 of Article 7.

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Article 15
DEPENDENT PERSONAL SERVICES
1. Subject to the provisions of Articles 16 (Directors'
Fees), 18 (Pensions, Social Security, Annuities, Alimony, and
Child Support) and 19 (Government Service), salaries, wages, and
other remuneration derived by a resident of a Contracting State
in respect of an employment shall be taxable only in that State
unless the employment is exercised in the other Contracting
State. If the employment is so exercised, such remuneration as
is derived therefrom may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remunera-
tion derived by a resident of a Contracting State in respect of
an employment exercised in the other Contracting State shall be
taxable only in the first-mentioned State if:
a) the recipient is present in the other State for a
period or periods not exceeding in the aggregate 183 days in
any twelve month period commencing or ending in the taxable
year concerned;
b) the remuneration is paid by, or on behalf of, an
employer who is not a resident of the other State; and
c) the remuneration is not borne by a permanent estab-
lishment or a fixed base which the employer has in the other
State.
3. Notwithstanding the preceding provisions of this Article,
remuneration described in paragraph 1 that is derived by a resi-
dent of a Contracting State in respect of an employment as a
member of the regular complement of a ship or aircraft operated
in international traffic shall be taxable only in that State.

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Article 16
DIRECTORS' FEES
Directors' fees and other compensation derived by a resident
of a Contracting State for services rendered in the other Con-
tracting State in his capacity as a member of the board of
directors of a company that is a resident of the other Contract-
ing State may be taxed in that other Contracting State.

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Article 17
ARTISTES AND SPORTSMEN
1. Income derived by a resident of a Contracting State as
an entertainer, such as a theater, motion picture, radio, or
television artiste, or a musician, or as a sportsman, from his
personal activities as such exercised in the other Contracting
State, which income would be exempt from tax in that other
Contracting State under the provisions of Articles 14 (Indepen-
dent Personal Services) and 15 (Dependent Personal Services) may
be taxed in that other State, except where the amount of the
gross receipts derived by such entertainer or sportsman, includ-
ing expenses reimbursed to him or borne on his behalf, from such
activities does not exceed twenty thousand United States dollars
($20,000) or its equivalent in ______ for the taxable year
concerned.
2. Where income in respect of activities exercised by an
entertainer or a sportsman in his capacity as such accrues not to
the entertainer or sportsman himself but to another person, that
income, notwithstanding the provisions of Articles 7 (Business
Profits) and 14 (Independent Personal Services), may be taxed in
the Contracting State in which the activities of the entertainer
or sportsman are exercised, unless it is established that neither
the entertainer or sportsman nor persons related thereto
participate directly or indirectly in the profits of that other
person in any manner, including the receipt of deferred
remuneration, bonuses, fees, dividends, partnership distribu-
tions, or other distributions.

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Article 18
PENSIONS, SOCIAL SECURITY, ANNUITIES,
ALIMONY, AND CHILD SUPPORT
1. Subject to the provisions of Article 19 (Government
Service), pension distributions and other similar remuneration
beneficially owned by a resident of a Contracting State, whether
paid periodically or as a single sum, shall be taxable only in
that State, but only to the extent not included in taxable income
in the other Contracting State prior to the distribution.
2. Notwithstanding the provisions of paragraph 1, payments
made by a Contracting State under provisions of the social
security or similar legislation of that State to a resident of
the other Contracting State or to a citizen of the United States
shall be taxable only in the first-mentioned State.
3. Annuities derived and beneficially owned by an
individual resident of a Contracting State shall be taxable only
in that State. The term "annuities" as used in this paragraph
means a stated sum paid periodically at stated times during a
specified number of years, under an obligation to make the
payments in return for adequate and full consideration (other
than services rendered).
4. Alimony paid by a resident of a Contracting State, and
deductible therein, to a resident of the other Contracting State
shall be taxable only in that other State. The term "alimony" as
used in this paragraph means periodic payments made pursuant to a
written separation agreement or a decree of divorce, separate
maintenance, or compulsory support, which payments are taxable to
the recipient under the laws of the State of which he is a
resident.
5. Periodic payments, not dealt with in paragraph 4, for
the support of a child made pursuant to a written separation
agreement or a decree of divorce, separate maintenance, or
compulsory support, paid by a resident of a Contracting State to
a resident of the other Contracting State, shall be exempt from
tax in both Contracting States.
6. For purposes of this Convention, where an individual who
is a participant in a pension plan that is established and

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recognized under the legislation of one of the Contracting States
performs personal services in the other Contracting State:
a) Contributions paid by or on behalf of the
individual to the plan during the period that he performs
such services in the other State shall be deductible (or
excludible) in computing his taxable income in that State.
Any benefits accrued under the plan or payments made to the
plan by or on behalf of his employer during that period
shall not be treated as part of the employee's taxable
income and shall be allowed as a deduction in computing the
profits of his employer in that other State.
b) Income earned but not distributed by the plan shall
not be taxable in the other State until such time and to the
extent that a distribution is made from the plan.
c) Distributions from the plan to the individual shall
not be subject to taxation in the other Contracting State if
the individual contributes such amounts to a similar plan
established in the other State within a time period and in
accordance with any other requirements imposed under the
laws of the other State.
d) The provisions of this paragraph shall not apply
unless:
(i) contributions by or on behalf of the
individual to the plan (or to another similar plan for
which this plan was substituted) were made before he
arrived in the other State; and
(ii) the competent authority of the other State
has agreed that the pension plan generally corresponds
to a pension plan recognized for tax purposes by that
State.
The benefits granted under this paragraph shall not exceed the
benefits that would be allowed by the other State to its
residents for contributions to, or benefits otherwise accrued
under a pension plan recognized for tax purposes by that State.

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Article 19
GOVERNMENT SERVICE
1. Notwithstanding the provisions of Articles 14 (Indepen-
dent Personal Services), 15 (Dependent Personal Services), 16
(Director's Fees) and 17 (Artistes and Sportsmen):
a) Salaries, wages and other remuneration, other than
a pension, paid from the public funds of a Contracting State
or a political subdivision or a local authority thereof to
an individual in respect of services rendered to that State
or subdivision or authority in the discharge of functions of
a governmental nature shall, subject to the provisions of
subparagraph (b), be taxable only in that State;
b) such remuneration, however, shall be taxable only
in the other Contracting State if the services are rendered
in that State and the individual is a resident of that State
who:
i) is a national of that State; or
ii) did not become a resident of that State solely
for the purpose of rendering the services.
2.Notwithstanding the provisions of paragraph 1 of
Article 18 (Pensions, Social Security, Annuities, Alimony, and
Child Support):
a) any pension paid from the public funds of a Con-
tracting State or a political subdivision or a local author-
ity thereof to an individual in respect of services rendered
to that State or subdivision or authority in the discharge
of functions of a governmental nature shall, subject to the
provisions of subparagraph (b), be taxable only in that
State;
b) such pension, however, shall be taxable only in the
other Contracting State if the individual is a resident of,
and a national of, that State.

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Article 20
STUDENTS AND TRAINEES
Payments received by a student, apprentice, or business
trainee who is, or was immediately before visiting a Contracting
State, a resident of the other Contracting State, and who is
present in the first-mentioned State for the purpose of his full-
time education at an accredited educational institution, or for
his full-time training, shall not be taxed in that State, provid-
ed that such payments arise outside that State, and are for the
purpose of his maintenance, education or training. The exemption
from tax provided by this Article shall apply to an apprentice or
business trainee only for a period of time not exceeding one year
from the date he first arrives in the first-mentioned Contracting
State for the purpose of his training.

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Article 21
OTHER INCOME
1. Items of income beneficially owned by a resident of a
Contracting State, wherever arising, not dealt with in the
foregoing Articles of this Convention shall be taxable only in
that State.
2. The provisions of paragraph 1 shall not apply to income,
other than income from real property as defined in paragraph 2 of
Article 6 (Income from Real Property (Immovable Property)), if
the beneficial owner of the income, being a resident of a Con-
tracting State, carries on business in the other Contracting
State through a permanent establishment situated therein, or
performs in that other State independent personal services from a
fixed base situated therein, and the income is attributable to
such permanent establishment or fixed base. In such case the
provisions of Article 7 (Business Profits) or Article 14 (Inde-
pendent Personal Services), as the case may be, shall apply.

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Article 22
LIMITATION ON BENEFITS
1. A resident of a Contracting State shall be entitled to
benefits otherwise accorded to residents of a Contracting State
by this Convention only to the extent provided in this Article.
2. A resident of a Contracting State shall be entitled to
all the benefits of this Convention if the resident is:
a) an individual;
b) a qualified governmental entity;
c) a company, if
i) all the shares in the class or classes of
shares representing more than 50 percent of the voting
power and value of the company are regularly traded on
a recognized stock exchange, or
ii) at least 50 percent of each class of shares in
the company is owned directly or indirectly by
companies entitled to benefits under clause i),
provided that in the case of indirect ownership, each
intermediate owner is a person entitled to benefits of
the Convention under this paragraph;
d) described in subparagraph 1(b)(i) of Article 4
(Residence);
e) described in subparagraph 1(b)(ii) of Article 4
(Residence), provided that more than 50 percent of the
person's beneficiaries, members or participants are
individuals resident in either Contracting State; or
f) a person other than an individual, if:
i) On at least half the days of the taxable year
persons described in subparagraphs a), b), c), d) or e)
own, directly or indirectly (through a chain of
ownership in which each person is entitled to benefits
of the Convention under this paragraph), at least 50
percent of each class of shares or other beneficial
interests in the person, and

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ii) less than 50 percent of the person's gross
income for the taxable year is paid or accrued,
directly or indirectly, to persons who are not
residents of either Contracting State (unless the
payment is attributable to a permanent establishment
situated in either State), in the form of payments that
are deductible for income tax purposes in the person’s
State of residence.
3. a) A resident of a Contracting State not otherwise
entitled to benefits shall be entitled to the benefits of
this Convention with respect to an item of income derived
from the other State, if:
i) the resident is engaged in the active conduct
of a trade or business in the first-mentioned State,
ii) the income is connected with or incidental to
the trade or business, and
iii) the trade or business is substantial in
relation to the activity in the other State generating
the income.
b) For purposes of this paragraph, the business of
making or managing investments will not be considered an
active trade or business unless the activity is banking,
insurance or securities activity conducted by a bank,
insurance company or registered securities dealer.
c) Whether a trade or business is substantial for
purposes of this paragraph will be determined based on all
the facts and circumstances. In any case, however, a trade
or business will be deemed substantial if, for the preceding
taxable year, or for the average of the three preceding
taxable years, the asset value, the gross income, and the
payroll expense that are related to the trade or business in
the first-mentioned State equal at least 7.5 percent of the
resident's (and any related parties') proportionate share of
the asset value, gross income and payroll expense,
respectively, that are related to the activity that
generated the income in the other State, and the average of
the three ratios exceeds 10 percent.
d) Income is derived in connection with a trade or
business if the activity in the other State generating the

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income is a line of business that forms a part of or is
complementary to the trade or business. Income is
incidental to a trade or business if it facilitates the
conduct of the trade or business in the other State.
4. A resident of a Contracting State not otherwise entitled
to benefits may be granted benefits of the Convention if the
competent authority of the State from which benefits are claimed
so determines.
5. For purposes of this Article the term "recognized stock
exchange" means:
a) the NASDAQ System owned by the National Association
of Securities Dealers, Inc. and any stock exchange regis-
tered with the U.S. Securities and Exchange Commission as a
national securities exchange under the U.S. Securities
Exchange Act of 1934; and
b) [stock exchanges of the other Contracting State].

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Article 23
RELIEF FROM DOUBLE TAXATION
1. In accordance with the provisions and subject to the
limitations of the law of the United States (as it may be amended
from time to time without changing the general principle hereof),
the United States shall allow to a resident or citizen of the
United States as a credit against the United States tax on income
a) the income tax paid or accrued to _______ by or on
behalf of such citizen or resident; and
b) in the case of a United States company owning at
least 10 percent of the voting stock of a company that is a
resident of _______ and from which the United States company
receives dividends, the income tax paid or accrued to
________ by or on behalf of the payor with respect to the
profits out of which the dividends are paid.
For the purposes of this paragraph, the taxes referred to in
paragraphs 1(b) and 2 of Article 2 (Taxes Covered) shall be
considered income taxes.
2. In accordance with the provisions and subject to the
limitations of the law of ________ (as it may be amended from
time to time without changing the general principle hereof),
________ shall allow to a resident or citizen of_________ as a
credit against the _________ tax on income
a) the income tax paid or accrued to the United States
by or on behalf of such resident of citizen; and
b) in the case of a
company owning at least
10 percent of the voting stock of a company that is a
resident of the United States and from which the
company receives dividends, the income tax paid or accrued
to the United States by or on behalf of the payor with
respect to the profits out of which the dividends are paid.
For the purposes of this paragraph, the taxes referred to in
paragraphs 1(a) and 2 of Article 2 (Taxes Covered) shall be
considered income taxes.
3. Where a United States citizen is a resident of ________:

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a) with respect to items of income that under the
provisions of this Convention are exempt from United States
tax or that are subject to a reduced rate of United States
tax when derived by a resident of __________ who is not a
United States citizen, _________ shall allow as a credit
against ________ tax, only the tax paid, if any, that the
United States may impose under the provisions of this Con-
vention, other than taxes that may be imposed solely by
reason of citizenship under the saving clause of paragraph 4
of Article 1 (General Scope);
b) for purposes of computing United States tax on
those items of income referred to in subparagraph (a), the
United States shall allow as a credit against United States
tax the income tax paid to ________ after the credit re-
ferred to in subparagraph (a); the credit so allowed shall
not reduce the portion of the United States tax that is
creditable against the ________ tax in accordance with
subparagraph (a); and
c) for the exclusive purpose of relieving double
taxation in the United States under subparagraph (b), items
of income referred to in subparagraph (a) shall be deemed to
arise in ________ to the extent necessary to avoid double
taxation of such income under subparagraph (b).

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Article 24
NON-DISCRIMINATION
1. Nationals of a Contracting State shall not be subjected
in the other Contracting State to any taxation or any requirement
connected therewith that is more burdensome than the taxation and
connected requirements to which nationals of that other State in
the same circumstances, particularly with respect to taxation on
worldwide income, are or may be subjected. This provision shall
also apply to persons who are not residents of one or both of the
Contracting States.
2. The taxation on a permanent establishment or fixed base
that a resident or enterprise of a Contracting State has in the
other Contracting State shall not be less favorably levied in
that other State than the taxation levied on enterprises or
residents of that other State carrying on the same activities.
The provisions of this paragraph shall not be construed as
obliging a Contracting State to grant to residents of the other
Contracting State any personal allowances, reliefs, and reduc-
tions for taxation purposes on account of civil status or family
responsibilities that it grants to its own residents.
3. Except where the provisions of paragraph 1 of Article 9
(Associated Enterprises), paragraph 4 of Article 11 (Interest),
or paragraph 4 of Article 12 (Royalties) apply, interest, royal-
ties, and other disbursements paid by a resident of a Contracting
State to a resident of the other Contracting State shall, for the
purpose of determining the taxable profits of the first-mentioned
resident, be deductible under the same conditions as if they had
been paid to a resident of the first-mentioned State. Similarly,
any debts of a resident of a Contracting State to a resident of
the other Contracting State shall, for the purpose of determining
the taxable capital of the first-mentioned resident, be
deductible under the same conditions as if they had been
contracted to a resident of the first-mentioned State.
4. Enterprises of a Contracting State, the capital of which
is wholly or partly owned or controlled, directly or indirectly,
by one or more residents of the other Contracting State, shall
not be subjected in the first-mentioned State to any taxation or
any requirement connected therewith that is more burdensome than
the taxation and connected requirements to which other similar
enterprises of the first-mentioned State are or may be subjected.

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5. Nothing in this Article shall be construed as preventing
either Contracting State from imposing a tax as described in
paragraph 8 of Article 10 (Dividends).
6. The provisions of this Article shall, notwithstanding
the provisions of Article 2 (Taxes Covered), apply to taxes of
every kind and description imposed by a Contracting State or a
political subdivision or local authority thereof.

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Article 25
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both
of the Contracting States result or will result for him in
taxation not in accordance with the provisions of this
Convention, he may, irrespective of the remedies provided by the
domestic law of those States, and the time limits prescribed in
such laws for presenting claims for refund, present his case to
the competent authority of either Contracting State.
2. The competent authority shall endeavor, if the objection
appears to it to be justified and if it is not itself able to
arrive at a satisfactory solution, to resolve the case by mutual
agreement with the competent authority of the other Contracting
State, with a view to the avoidance of taxation which is not in
accordance with the Convention. Any agreement reached shall be
implemented notwithstanding any time limits or other procedural
limitations in the domestic law of the Contracting States.
Assessment and collection procedures shall be suspended during
the pendency of any mutual agreement proceeding.
3. The competent authorities of the Contracting States
shall endeavor to resolve by mutual agreement any difficulties or
doubts arising as to the interpretation or application of the
Convention. In particular the competent authorities of the
Contracting States may agree:
a) to the same attribution of income, deductions,
credits, or allowances of an enterprise of a Contracting
State to its permanent establishment situated in the other
Contracting State;
b) to the same allocation of income, deductions,
credits, or allowances between persons;
c) to the same characterization of particular items of
income, including the same characterization of income that
is assimilated to income from shares by the taxation law of
one of the Contracting States and that is treated as a
different class of income in the other State;
d) to the same characterization of persons;

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e) to the same application of source rules with respect
to particular items of income;
f) to a common meaning of a term;
g) to advance pricing arrangements; and
h) to the application of the provisions of domestic law
regarding penalties, fines, and interest in a manner consis-
tent with the purposes of the Convention.
They may also consult together for the elimination of double
taxation in cases not provided for in the Convention.
4. The competent authorities also may agree to increases in
any specific dollar amounts referred to in the Convention to
reflect economic or monetary developments.
5. The competent authorities of the Contracting States may
communicate with each other directly for the purpose of reaching
an agreement in the sense of the preceding paragraphs.

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Article 26
EXCHANGE OF INFORMATION AND ADMINISTRATIVE ASSISTANCE
1. The competent authorities of the Contracting States
shall exchange such information as is relevant for carrying out
the provisions of this Convention or of the domestic laws of the
Contracting States concerning taxes covered by the Convention
insofar as the taxation thereunder is not contrary to the Conven-
tion, including information relating to the assessment or
collection of, the enforcement or prosecution in respect of, or
the determination of appeals in relation to, the taxes covered by
the Convention. The exchange of information is not restricted by
Article 1 (General Scope). Any information received by a
Contracting State shall be treated as secret in the same manner
as information obtained under the domestic laws of that State and
shall be disclosed only to persons or authorities (including
courts and administrative bodies) involved in the assessment,
collection, or administration of, the enforcement or prosecution
in respect of, or the determination of appeals in relation to,
the taxes covered by the Convention or the oversight of the
above. Such persons or authorities shall use the information
only for such purposes. They may disclose the information in
public court proceedings or in judicial decisions.
2. In no case shall the provisions of paragraph 1 be
construed so as to impose on a Contracting State the obligation:
a) to carry out administrative measures at variance
with the laws and administrative practice of that or of the
other Contracting State;
b) to supply information that is not obtainable under
the laws or in the normal course of the administration of
that or of the other Contracting State;
c) to supply information that would disclose any trade,
business, industrial, commercial, or professional secret or
trade process, or information the disclosure of which would
be contrary to public policy (ordre public).
3. Notwithstanding paragraph 2, the competent authority of
the requested State shall have the authority to obtain and
provide information held by financial institutions, nominees or
persons acting in an agency or fiduciary capacity, or respecting
interests in a person, including bearer shares, regardless of any

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laws or practices of the requested State that might otherwise
preclude the obtaining of such information. If information is
requested by a Contracting State in accordance with this Article,
the other Contracting State shall obtain that information in the
same manner and to the same extent as if the tax of the first-
mentioned State were the tax of that other State and were being
imposed by that other State, notwithstanding that the other State
may not, at that time, need such information for purposes of its
own tax. If specifically requested by the competent authority of
a Contracting State, the competent authority of the other
Contracting State shall provide information under this Article in
the form of depositions of witnesses and authenticated copies of
unedited original documents (including books, papers, statements,
records, accounts, and writings), to the same extent such
depositions and documents can be obtained under the laws and
administrative practices of that other State with respect to its
own taxes.
4. Each of the Contracting States shall endeavor to collect
on behalf of the other Contracting State such amounts as may be
necessary to ensure that relief granted by the Convention from
taxation imposed by that other State does not inure to the
benefit of persons not entitled thereto. This paragraph shall
not impose upon either of the Contracting States the obligation
to carry out administrative measures that would be contrary to
its sovereignty, security, or public policy.
5. For the purposes of this Article, the Convention shall
apply, notwithstanding the provisions of Article 2 (Taxes Cov-
ered), to taxes of every kind imposed by a Contracting State.
6. The competent authority of the requested State shall
allow representatives of the applicant State to enter the
requested State to interview individuals and examine books and
records with the consent of the persons subject to examination.

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Article 27
DIPLOMATIC AGENTS AND CONSULAR OFFICERS
Nothing in this Convention shall affect the fiscal privileg-
es of diplomatic agents or consular officers under the general
rules of international law or under the provisions of special
agreements.

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Article 28
ENTRY INTO FORCE
1. This Convention shall be subject to ratification in
accordance with the applicable procedures of each Contracting
State. Each Contracting State shall notify the other as soon as
its procedures have been complied with.
2. The Convention shall enter into force on the date of the
receipt of the later of such notifications, and its provisions
shall have effect:
a) in respect of taxes withheld at source, for amounts
paid or credited on or after the first day of the second
month next following the date on which the Convention enters
into force;
b) in respect of other taxes, for taxable periods
beginning on or after the first day of January next follow-
ing the date on which the Convention enters into force.

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Article 29
TERMINATION
1. This Convention shall remain in force until terminated
by a Contracting State. Either Contracting State may terminate
the Convention by giving notice of termination to the other
Contracting State through diplomatic channels. In such event,
the Convention shall cease to have effect:
a) in respect of taxes withheld at source, for amounts
paid or credited after the expiration of the 6 month period
beginning on the date on which notice of termination was
given; and
b) in respect of other taxes, for taxable periods
beginning on or after the expiration of the 6 month period
beginning on the date on which notice of termination was
given.
IN WITNESS WHEREOF, the undersigned, being duly authorized
thereto by their respective Governments, have signed this
Convention.
DONE at
in duplicate, in the English and
languages, both texts being equally authentic, this day of
(month) , 19 .
FOR THE UNITED STATES FOR:
OF AMERICA: