Technical explanation PDF

with respect to the special reference to
third country investors.
The provisions for administrative
cooperation are also similar to those I
have described. However, there is no
article providing for assistance in col­
lection because it would require Po­
land to establish an administrative
mechanism which it felt it could not
undertake. The absence of this provi­
sion is not believed to create a practi­
cal problem, since it is unlikely that
persons resident outside Poland could
use a Polish address for collecting U.S.
investment income.
[13] Texts of Resolutions of
Ratification
[14] Resolved, (Two-thirds of the
Senators present concurring therein),
That the Senate advise and consent to
the ratification of the Convention be­
tween the Government of the United
States of America and the Government
of the Polish People’s Republic for
the Avoidance of Double Taxation
and the Prevention of Fiscal Evasion
with respect to Income, and a Related
Exchange of Notes, signed at Wash­
ington on October 8, 1974 (Ex. A,
94-1).
Technical Explanation1 of the Con
vention Between the Government of the
United States of America and
the Government of the Polish
People's Republic for the
Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with
Respect to taxes on income,
1 It is the practice of the Treasury Department to
prepare for the use of the Senate and other interested
peroono a Technical Explanation of the tax conventions
which are submitted to the Senate for io advice and
consent to ratification.
An income Tax Convention with Poland was signed
October 8, 1974, and submitted by the President to the
Senate on January 23, 1975. On November 7, 1975, the
Senate Committee on Foreign Relations held hearings
and thio Technical Explanation was presented. The Sen
ate voted ito advice and consent on November 18, 1975,
and instruments of ratification were exchanged on June
22, 1976, the convention thereby entering into force on
July 22, 1976.
Signed at Washington on October 8,
Article. 1. Scope of Convention
Under this article the Convention
will apply generally to persons who
are residents of one or both of the
Contracting States. However, persons
who are residents of one or both of the
Contracting States are sometimes not
within the scope of the Convention
and other persons who are not resi­
dents of either of the Contracting
States are within the scope of the Con­
vention. For example, Article 19
(Governmental Functions) covers
only citizens of a Contracting State
and, on the United States side, Article
20 (Relief from Double Taxation)
covers citizens of the United States,
whether or not these citizens are resi­
dents of either Contracting State.
Article 2. Taxes Covered by the
Convention
Paragraph (1) provides that the
Convention will apply to taxes on in­
come imposed by each Contracting
State.
Paragraph (2) provides that the
taxes presently existing to which the
Convention applies in the case of
Poland are the income tax (Law 339
of December 16, 1972); the tax on
salaries and wages (Law 41 of Febru­
ary 4, 1949); and the equalization tax
(surtax). In the case of the United
States, paragraph (2) provides that
the taxes presently existing to which
the Convention applies are the Fed­
eral income taxes imposed by the In­
ternal Revenue Code (“Code”), other
than the taxes imposed by chapters 2
(tax on self-employment income) and
21 (federal insurance contributions
act) of the Code. Among the taxes
covered are those imposed under sec­
tions 531 (accumulated earnings tax)
and 541 (personal holding company
tax) of the Code.
As in all other United States con­
ventions, the provisions of this Con­
vention, except for Article 21 (Non-
3 Page 416; pertinent excerpts from Senate Executive
Report No. 94-15, page 425; Senate Executive A io not
published.
discrimination), do not apply to taxes
imposed by the states of the United
States. However, in a Note accom­
panying the Convention, the United
States observes that generally the
states of the United States would not
tax a resident of Poland in a situation
where that resident is entitled to a
reduced rate or exemption under the
Convention. The Note also states that
if necessary the tax authorities of the
United States will use their best ef­
forts to secure exemption from any
state income taxes that may be im­
posed on shipping or airline enter­
prises of Poland.
Pursuant to paragraph (3), the
Convention will also apply to identical
or substantially similar taxes which
are subsequently imposed in addition
to, or in place of, the existing taxes.
Pursuant to paragraph (4), for
purposes of Article 21 (Nondiscrimi­
nation), the Convention applies to
taxes imposed at the national, state,
or local level, except the Polish Treas­
ury residence fee (oplata skarbowa za
zameldowanie). For a discussion of
the residence fee, see Article 21, infra.
Paragraph (5) provides that the
competent authority of each Contract­
ing State will notify the competent
authority of the other Contracting
State of any amendment of the tax
laws referred to in paragraph (2), or
of the adoption of identical or sub­
stantially similar taxes imposed in ad­
dition to, or in place of, those taxes.
The texts of such amendments or new
statutes are to be transmitted between
the competent authorities at least
once a year.
A
rticle 3. General Definitions
Paragraph (1) sets out definitions
of certain basic terms used in the Con­
vention. A number of important
terms, however, are defined elsewhere
in the Convention.
The term “Poland” means the
Polish People’s Republic. The term
“United States” means the United
States of America. When used in a
geographical sense, the term “United
States” means the states of the United
427
Signed at Washington on October 8, 19742

States and the District of Columbia.
Thus, the Convention does not apply
to the possessions of the United States
or the Commonwealth of Puerto Rico.
When used in a geographical sense,
the terms “Poland” and “United
States” also include their respective
territorial seas and continental shelves,
generally in accordance with the prin­
ciples of section 638 of the Code.
The terms “Contracting State” and
“the other Contracting State” are de­
fined to mean the United States or
Poland as the context requires.
The term “person” is defined as in­
cluding an individual, a trustee or ad­
ministrator, a company or juridical
person, and any other body of persons.
This definition includes a trust, an
estate and a partnership. The term
“company” means any corporate body
or any entity which is treated as a
corporate body for tax purposes.
The term “United States company”
is defined as a corporation, or any un­
incorporated entity treated as a United
States corporation for United States
tax purposes, which is created or
organized under the laws of the United
States, any state thereof, or the Dis­
trict of Columbia. A “Polish company”
is defined as a corporation, or any un­
incorporated entity treated as a Polish
corporation for purposes of Polish tax,
which is created or organized under
the laws of Poland.
The term “resident of Poland” is
defined as a Polish company or any
other person (except a company or
any entity treated as a company under
Polish law) resident in Poland for
purposes of its tax. Similarly, “resident
of the United States” means a United
States company and any other person
(except a company or any entity
treated as a corporation for United
States tax purposes) resident in the
United States for purposes of its tax.
Thus, a resident of the United States
includes a resident alien individual and
a resident citizen but not a foreign
corporation. A citizen of the United
States or Poland is not automatically
a resident of the United States or
Poland for purposes of this Conven­
tion. See Article 4 (Fiscal Residence)
for rules to determine the residence
of an individual who is a resident of
both Contracting States under these
definitions.
The Convention provides that a
partnership, trustee, or administrator
is a resident of a Contracting State
only to the extent that the income de­
rived by such person in that capacity
is subject to tax in such Contracting
State as the income of a resident. For
example, under United States laws, a
partnership is never, and an estate or
trust (acting through its fiduciary) is
often not, taxed as such. Under the
Convention, income received by a
partnership, estate, or trust will not be
treated for purposes of the Convention
as income received by a resident of
the United States unless such income
is subject to tax by the United States
as the income of a resident. Thus, the
treatment of income received by a
partnership will be determined by the
residence and taxation of its partners
with respect to that income. To the
extent the partners are subject to
United States tax as residents of the
United States, the partnership will be
treated as a resident of the United
States. Similarly, the treatment of in­
come received by a trust or estate will
be determined by the residence and
taxation of the person subject to tax
on such income, which may be the
grantor, the beneficiaries or the trust
or estate itself, as the case may be.
The terms “enterprise of a Con­
tracting State” and “enterprise of the
other Contracting State” mean, re­
spectively, an enterprise carried on by
a resident of a Contracting State and
an enterprise carried on by a resident
of the other Contracting State.
With respect to the United States,
the term “competent authority” means
the Secretary of the Treasury or his
delegate. With respect to Poland, it
means the Minister of Finance. The
term “State” means any national
State, whether or not a Contracting
State. The term “tax” means those
taxes imposed by the United States or
Poland to which the Convention ap­
plies by virtue of Article 2 (Taxes
Covered by the Convention).
The term “international traffic” is
defined to mean any voyage of a ship
or aircraft operated by a resident of
a Contracting State except where such
voyage is confined solely to places
within that Contracting State. Coastal
shipping along the Atlantic coast of
the United States is not a voyage in
international traffic. However, if a
ship operated by a resident of Poland
transports goods from Canada to the
United States, leaving some of the
goods in New York and the remainder
in Norfolk, the portion of the voyage
between New York and Norfolk is
international traffic.
Paragraph (2) provides that any
term used in the Convention which is
not defined therein will, unless the
context otherwise requires, have the
meaning which it has under the laws
of the Contracting State whose tax is
being determined. However, where a
term has a different meaning under
the laws of Poland and the United
States or where the meaning under the
laws of one of the Contracting States
is not readily determinable, the com­
petent authorities may for purposes of
the Convention establish a common
definition in order to prevent double
taxation or to further any other pur­
pose of the Convention.
Article 4. Fiscal Residence
This article sets forth rules for de­
termining the residence of individuals
who are residents of both Contracting
States under the definitions of para­
graphs (1) (g) and (1) (A) of Article
3 (General Definitions).
Under this article, an individual
who is a resident of both Contracting
States under their domestic laws will,
for purposes of the Convention, be
deemed to be a resident of the Con­
tracting State in which he has his per­
manent home, his center of vital inter­
ests (closest economic and personal
relations), a habitual abode, or his citi­
zenship, in the order listed. If the issue
is not settled by these tests, the com­
petent authorities may decide by mu­
tual agreement under Article 22 (Mu­
428

tual Agreement Procedure) the one
Contracting State of which he will be
considered to be a resident.
Article 5. General Rules of
Taxation
Under paragraph (1), a resident of
one Contracting State may be taxed by
the other Contracting State on any
income from sources within that other
Contracting State and only on such
income, subject to any limitations set
forth in the Convention. For this pur­
pose, the source rules contained in
various articles throughout the Con­
vention are to be applied. However, if
the resident is a citizen of the other
Contracting State, that Contracting
State may tax the resident without re­
gard to this paragraph because of the
saving clause of paragraph (3) of this
article.
Paragraph (2) contains the cus­
tomary rule that the Convention will
not restrict in any manner any exclu­
sion, exemption, deduction, credit, or
other allowance now or hereafter ac­
corded by the laws of a Contracting
State in the determination of the tax
imposed by it, or by any other agree­
ment between the Contracting States.
This rule reflects the principle that a
convention should not increase the tax
burden on residents of the Contracting
States.
Paragraph (3) contains the tradi­
tional saving clause under which the
United States reserves the right to tax
its citizens and residents (as defined in
Article 3 (General Definitions) and as
determined under Article 4 (Fiscal
Residence)) as if the Convention had
not come into effect. However, the
saving clause does not apply in several
cases in which its application would
contravene policies reflected in the
Convention. Thus, the saving clause
does not affect the provisions with re­
spect to relief from double taxation,
nondiscrimination, or the mutual
agreement procedure. Moreover, the
saving clause does not affect the bene­
fits of the Convention to teachers, stu­
dents, trainees, individuals performing
governmental functions and diplo­
matic and consular officers who are
neither citizens of nor have immigrant
status in the Contracting State impos­
ing the tax. In the case of the United
States, “immigrant status” means the
individual has been admitted to the
United States for permanent residence.
The saving clause is reciprocal.
Paragraph (5) authorizes the com­
petent authorities of the Contracting
States to prescribe regulations neces­
sary to carry out the provisions of the
Convention. On the United States
side,
this authority is also provided by
section 7805 of the Code.
Article 6. Permanent
Establishment
This article defines the term “per­
manent establishment. ” The existence
of a permanent establishment is rele­
vant under Article 8 (Business Profits)
to the taxation of business profits and
in determining the applicability of
other provisions of the Convention,
such as Articles 11 (Dividends), 12
(Interest), 13 (Royalties), and 14
(Capital Gains).
Under paragraph (1), the term
“permanent establishment” means a
fixed place of business through which
the business of an enterprise is wholly
or partly carried on. Illustrations in
paragraph (2) of a permanent estab­
lishment include a branch; an office;
a factory; a workshop; a mine, quarry
or other place of extraction of natural
resources; and a building site or con­
struction or assembly project which
exists for more than eighteen months.
As a general rule, any fixed facility or
premises through which an enterprise
conducts its business, for an indefinite
or substantial period of time will be
treated as a permanent establishment
unless it is used for one or more of the
activities described in paragraph (3).
Under the building site or construc­
tion or assembly project rule the eight­
een month period begins only when
work physically commences in the
other Contracting State. A series of
contracts or projects which are inter­
dependent both commercially and geo­
graphically is to be treated as a single
project for the purpose of applying the
eighteen months test.
Paragraph (3) specifically provides
that a permanent establishment does
not include a fixed place of business if
it is used only for one or more of the
following:
“(a) The use of facilities for the
purpose of storage, display, or delivery
of goods or merchandise belonging to
the enterprise;
“(b) The maintenance of a stock of
goods belonging to the enterprise for
the purpose of storage, display or de­
livery;
“(c) The maintenance of a stock of
goods or merchandise belonging to the
enterprise for the purpose of process­
ing or reprocessing by another enter­
prise;
“(d) The maintenance of a fixed
place of business for the purpose of
purchasing goods or merchandise, or
for collecting information, for the en­
terprise; or
“(e) The maintenance of a fixed
place of business for the purpose of
advertising, for the supply of informa­
tion, for scientific research, or for simi­
lar activities which have a preparatory
or auxiliary character, for the enter­
prise. ”
As noted, these exceptions are cumu­
lative and a fixed place of business
used solely for one or more of these
purposes will not be considered a per­
manent establishment under the Con­
vention.
Under paragraph (4) a person act­
ing in one Contracting State on behalf
of an enterprise of the other Contract­
ing State, other than an agent of an
independent status to whom para­
graph (5) applies, will be deemed to
be a permanent establishment if such
person has, and habitually exercises in
that first-mentioned Contracting State,
an authority to conclude contracts in
the name of the enterprise, unless his
activities are limited to the purchase
of goods or merchandise for the enter­
prise.
On the other hand, paragraph (5)
provides that an enterprise of one Con­
tracting State will not be deemed to
have a permanent establishment in the
other Contracting State merely be­
cause such enterprise carries on busi­
429

ness in such other Contracting State
through a broker, general commission
agent, or any other agent of an inde­
pendent status, if such agent is acting
in the ordinary course of its business,
and whether or not such agent acts
exclusively for one or more principals.
Paragraph (6) provides that an en­
terprise of one Contracting State shall
not be deemed to have a permanent
establishment in the other Contracting
State merely because such enterprise
sells at the termination of a trade fair
in the other Contracting State goods
or merchandise which were displayed
by such enterprise at the trade fair.
This exception does not appear in ex­
isting United States conventions, but
a similar exception is contained in the
pending conventions with the Soviet
Union and Romania.
Under paragraph (7), the fact that
a company resident in one Contracting
State controls or is controlled by a
company resident in the other Con­
tracting State, or which carries on
business in that other Contracting
State (whether through a permanent
establishment or otherwise), will not
of itself constitute for either company
a permanent establishment of the
other.
Article 7. Income from Real
Property
Under paragraph (1), income from
real property, including royalties and
other payments in respect of the ex­
ploitation of natural resources, e. g., oil
wells, and gains from the sale, ex­
change or other disposition of such
property or of the right giving rise to
such royalties or other payments, may
be taxed by the Contracting State in
which the real property or natural re­
sources are situated. However, income
from real property does not include in­
terest on indebtedness secured by real
property (e. g., mortgages) or by a
right giving rise to royalties or other
payments in respect of the exploitation
of natural resources. Such interest in­
come is covered by Article 12 (Inter­
est).
Paragraph (1) applies to income
derived from the usufruct, direct use,
letting, or use in any other form of
real property.
Article 8. Business Profits
Paragraph (1) sets forth the gen­
eral rule that profits of an enterprise
of one Contracting State will be tax­
able only by that Contracting State
unless the enterprise carries on busi­
ness in the other Contracting State
through a permanent establishment
situated therein. Where there is a per­
manent establishment, only the profits
attributable to the permanent estab­
lishment can be taxed by that other
Contracting State, unless the enter­
prise is carried by a resident who is a
citizen of the other Contracting State.
(See the savings clause in paragraph
(3) of Article 5 (General Rules for
Taxation). ) It is intended that for
purposes of the Convention, including
paragraph (1) of Article 5 (General
Rules of Taxation) and Article 20
(Relief from Double Taxation), prof­
its whether from sources within or
without a Contracting State attribu­
table to a permanent establishment
which a resident of one Contracting
State has in the other Contracting
State will be considered to be from
sources within that other Contracting
State. Thus, items of income described
in section 864(c) (4) (B) of the Code
attributable to a permanent establish­
ment situated in the United States
will be subject to tax by the United
States.
In determining the proper attribu­
tion of profits under the Convention,
paragraph (2) provides that both
Contracting States will attribute to the
permanent establishment such profits
as it would be expected to make if it
were a distinct and separate enter­
prise engaged in the same or similar
activities under the same or similar
conditions and dealing wholly inde­
pendently with the enterprise
of which it is a permanent estab­
lishment. Under paragraph (3),
expenses which are incurred for the
purposes of the permanent establish­
ment, including executive and general
administrative expenses, whether in­
curred in the State in which the per­
manent establishment is situated or
elsewhere, will be allowed as deduc­
tions in determining the profits of the
permanent establishment. However, in
determining the amount of the deduc­
tion under paragraph (3) for expenses
incurred by the head office, the deduc­
tion may be limited to the expense
incurred without including a profit
element for the head office.
Paragraph (4) provides that no
profits will be attributed to a perma­
nent establishment merely because of
the purchase of goods or merchandise
by that permanent establishment, or
by the enterprise of which it is a per­
manent establishment, for such enter­
prise. Paragraph (2) of the article
does not override paragraph (4).
Thus, where a permanent establish­
ment purchases goods for its head of­
fice, the profits attributed under para­
graph (2) to the permanent establish­
ment with respect to its other activities
will not be increased by adding a no­
tational figure for profits from pur­
chasing.
Although the term “profits of an en­
terprise” is not defined in the Conven­
tion, in general that term includes
items of income which are defined in
other United States conventions as
“business profits” or as “industrial or
commercial profits, ” such as income
derived from manufacturing, mer­
cantile, banking, insurance, agricul­
tural, fishing or mining activities, the
operation of ships or aircraft, the fur­
nishing of services, and the rental of
tangible personal (movable) property.
It does not include income from the
performance of personal services de­
rived by an individual either as an
employee or in an independent ca­
pacity. The term also includes income
derived from real property and natural
resources, dividends, interest, invest­
ment income on required reserves from
insurance activities, royalties and capi­
tal gains, but only if the property or
rights giving rise to such income are
effectively connected with a perma­
nent establishment. See paragraph (3)
of Article 11 (Dividends), paragraph
(2) of Article 12 (Interest), para­
graph (4) of Article 13 (Royalties),
430

and paragraph (1) (b) of Article 14
(Capital Gains).
While this Convention does not con­
tain an explicit definition of the term
“effectively connected, ” that term has
substantially the same meaning as in
section 864(c) (2) of the Code. There­
fore, factors to be taken into account
include whether the rights or property
are used in or held for use in carrying
on an activity giving rise to profits
through a permanent establishment
and whether the activities carried on
through such permanent establishment
were a material factor in the realiza­
tion of the income derived from such
property or rights. For this purpose,
due regard shall be given to whether
or not such property or rights or such
income were accounted for through
such permanent establishment.
Under paragraph (5), where profits
include items of income which are
dealt with separately in other articles
of the Convention, the provisions of
those articles will, except as otherwise
provided therein, supersede the pro­
visions of this article. Thus, for exam­
ple, taxation of income from copy­
rights of motion picture films or for
radio or television broadcasting tapes
will be controlled by Article 13 (Roy­
alties) and not by this article unless
the copyright is effectively connected
with a permanent establishment.
Article 9. Shipping and Air
Transport
Paragraph (1) provides that, not­
withstanding Article 8 (Business Prof­
its) and Article 14 (Capital Gains),
income derived by a resident of Po­
land from the operation in interna­
tional traffic of ships or aircraft (re­
gardless of where registered) will be
exempt from tax by the United States.
Under paragraph (2), such income
derived by a resident of the United
States will be exempt from tax by
Poland if the ship or aircraft is regis­
tered in the United States.
The term “income” is intended to
include gains from the sale, exchange
or other disposition of ships or aircraft
described in paragraph (1) or (2).
This article also applies to income de­
rived from the rental of such ships or
aircraft under a full or bareboat char­
ter if the lessor is engaged in the op­
eration of ships or aircraft in interna­
tional traffic and the rental income is
supplementary to such operations. For
example, if an airline which is a resi­
dent of one Contracting State has ex­
cess equipment in the winter months
and leases several of its aircraft which
are not required by it during that pe­
riod to an airline which is a resident
of the other Contracting State, that
rental income of the lessor is not sub­
ject to tax by that other Contracting
State, whether or not the lessee uses
the aircraft in international traffic.
Paragraph (3) makes clear that the
article also applies to income derived
by a resident of one Contracting State
from the use, maintenance, and lease
of containers, trailers for the inland
transportation of containers, lighters
operated in the lighters-aboard-ship
system, and other related equipment in
connection with the operation in in­
ternational traffic of ships or aircraft
by the resident described in paragraph
(1) or (2).
This article is subject to the saving
clause of paragraph (3) of Article 5
(General Rules of Taxation). There­
fore, a Contracting State may tax in­
come from international traffic derived
by a resident of the other Contracting
State without regard to this article if
such resident is a citizen of the first-
mentioned Contracting State.
Article 10. Related Persons
This article complements section
482 of the Code and confirms the
power of the United States to allocate
items of income, deduction, credit or
allowance in certain cases. Under
paragraph (1), if conditions are made
or imposed between related enterprises
in their commercial or financial rela­
tions which differ from those which
would be made between independent
enterprises, any profits which would,
but for those conditions, have accrued
to one of the enterprises, but, by rea­
son of those conditions, have not so
accrued, may be included in the profits
of that enterprise and taxed accord­
ingly. Where an enterprise of a Con­
tracting State participates directly or
indirectly in the management, control
or capital of an enterprise of the other
Contracting State, or 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, those enterprises are related for
purposes of the Convention.
Paragraph (2) sets forth an explicit
formulation of the consequence of an
adjustment made in accordance with
paragraph (1) by a Contracting State
to the income of one of its residents.
In such event, the other Contracting
State must, if it agrees with such re­
determination, make a corresponding
adjustment to the income of a person
in such other Contracting State re­
lated to such resident. If the other
Contracting State disagrees with the
redetermination, the two Contracting
States must endeavor to reach agree­
ment in accordance with the mutual
agreement procedure in Article 22
(Mutual Agreement Procedure).
Article 11. Dividends
Paragraph (1) provides that divi­
dends paid by a company which is a
resident of one Contracting State to a
resident of the other Contracting State
may be taxed by that other Contract­
ing State. However, paragraph (2)
limits the rate of tax in the former
Contracting State to a rate not in ex­
cess of five percent of the gross amount
of the dividend if the recipient is a
company which holds directly at least
ten percent of the outstanding shares
of the voting stock of the company
paying the dividends, and to a rate
not in excess of fifteen percent in all
other cases. These rate limitations do
not affect the taxation of profits of the
company which pays the dividends.
The rate limitations do not apply if
the recipient, being a resident of one
Contracting State, has a permanent
establishment in the other Contracting
State, of which the company paying
the dividend is a resident, and the
shares with respect to which the divi­
dends are paid are effectively con­

nected with such permanent establish­
ment. In such a case, the dividends
will be treated as profits subject to
Article 8 (Business Profits). If the re­
cipient is a citizen of the Contracting
State of which the company paying
the dividend is a resident, that Con­
tracting State may tax the recipient
without regard to this article because
of the saving clause of paragraph (3)
of Article 5 (General Rules of Taxa­
tion). It is intended that, for purposes
of Article 20 (Relief from Double
Taxation), dividends paid by a com­
pany of a Contracting State are from
sources within that Contracting State.
Article 12. Interest
Paragraph (1) provides that inter­
est arising in a Contracting State and
paid to a resident of the other Con­
tracting State will be exempt from tax
by the first-mentioned Contracting
State.
Paragraph (2) provides that the ex­
emption in paragraph (1) does not
apply if the recipient of the interest,
being a resident of one Contracting
State, has a permanent establishment
in the other Contracting State and the
indebtedness giving rise to the interest
is effectively connected with such per­
manent establishment. In such a case,
the interest will be treated as profits
subject to Article 8 (Business Profits).
If excessive interest is paid owing
to a special relationship between the
payor and the recipient or between
both of them and some other person,
paragraph (3) provides that the arti­
cle does not apply to the excessive por­
tion of the payment. The excessive
portion may be taxed by each Con­
tracting State according to its own
laws, including the Convention where
applicable. In the case of the United
States, the excessive portion may, for
example, be taxed as a dividend, in
which case the provisions of Article 11
(Dividends) may apply.
Paragraph (4) defines interest for
purposes of the Convention as income
from bonds, debentures, Government
securities, notes or other evidences of
indebtedness, whether or not secured
and whether or not carrying a right to
participate in profits and debt-claims
of every kind, as well as all other in­
come which, under the taxation law
of the Contracting State in which the
income arises, is assimilated to income
from money lent.
Paragraph (5) sets forth the source
rules for interest. With two exceptions,
interest will be treated as arising in a
Contracting State only if paid by that
Contracting State, a political subdivi­
sion or local authority thereof, or a
resident of that Contracting State.
Under the first exception, if the per­
son paying the interest (whether or
not such person is a resident of one of
the Contracting States) has a perma­
nent establishment in one of the Con­
tracting States in connection with
which the indebtedness on which the
interest is paid was incurred and such
interest is borne by the permanent es­
tablishment, the interest will be
deemed to arise in the Contracting
State in which the permanent estab­
lishment is situated. For example, if a
resident of France has a permanent
establishment in Poland which bor­
rows money from a resident of the
United States and bears the interest,
the interest will be deemed to be from •
Polish sources. Thus, if paragraph (1)
of this article is applicable, the inter­
est will be exempt from Polish tax.
The rules of Article 6 (Permanent Es­
tablishment) will be applied to deter­
mine whether the resident of France
has a permanent establishment in Po­
land.
Under the second exception, if the
person paying the interest is a resident
of one of the Contracting States and
has a permanent establishment in a
State other than a Contracting State
in connection with which the indebt­
edness on which the interest is paid
was incurred and such interest is paid
to a resident of the other Contracting
State, and such interest is borne by
such
permanent establishment, the in­
terest will be deemed to arise in the
State in which the permanent estab­
lishment is situated. Interest described
in the second exception will be exempt
from tax in the Contracting State
where the payor is a resident because,
under Article 5 (General Rules of
Taxation), a resident of one Contract­
ing State not a citizen of the other
Contracting State may be taxed by
that other Contracting State only on
income from sources within that other
Contracting State. For example, if a
resident of the United States has a
permanent establishment in France
which borrows money from a resident
of Poland and bears the interest, the
interest will be deemed to be from
French sources. Thus, the United
States may not tax such income if the
recipient-resident of Poland is not a
citizen of the United States. The rules
of Article 6 (Permanent Establish­
ment) will be applied to determine
whether the resident of the United
States has a permanent establishment
in France.
This article is subject to the saving
clause of paragraph (3) of article 5
(General Rules of Taxation). There­
fore, interest derived by a citizen of
the Contracting State in which the in­
terest arises may be taxed by that Con­
tracting State without regard to this
article.
Article 13. Royalties
Paragraph (1) provides that royal­
ties arising in a Contracting State and
paid to a resident of the other Con­
tracting State will be taxable by that
other Contracting State. In addition,
under paragraph (2) royalties may be
taxed in the Contracting State where
they arise at a rate not to exceed ten
percent of the gross amount of the
royalty.
The term “royalties” is defined as
payments of any kind received as con­
sideration for the use of, or the right
to use, copyrights of a literary, artistic,
or scientific work, including any copy­
rights of motion picture films or radio
or television broadcasting tapes, any
patent, trademark, design or model,
plan, secret formula or process, or for
information concerning industrial,
commercial, or scientific experience or
skill (know-how). Royalties include
gains derived from the sale, exchange,
or other disposition of any such prop­
erty or rights to the extent the
432

amounts realized on such sale, ex­
change or other disposition for consid­
eration are contingent on the produc­
tivity, use, or disposition of the prop­
erty or rights. If the amounts realized
are not so contingent, the provisions
of Article 14 (Capital Gains) may ap­
ply.
Under paragraph (4), the tax rate
limitation of paragraph (2) will not
apply if the recipient of the royalty,
being a resident of one Contracting
State, has a permanent establishment
in the other Contracting State in
which the royalty arises and the right
or property giving rise to the royalty
is effectively connected with the per­
manent establishment. In such a case,
the royalty will be treated as profits
subject to Article 8 (Business Profits).
Paragraph (5) provides that royal­
ties (including contingent gains) will
be deemed to arise in a Contracting
State only to the extent they are pay­
ments made as consideration for the
use of, or the right to use, property or
rights described in paragraph (3)
within that Contracting State. This
source rule is similar to the source rule
in section 861(a) (4) of the Code.
If excessive royalties are paid owing
to a special relationship between the
payer and the recipient or between
both of them and some other person,
paragraph (6) provides that the pro­
visions of the article do not apply to
the excessive portion of the royalty.
The excessive portion may be taxed
by each Contracting State according
to its own laws, including the Conven­
tion where applicable. Thus, the ex­
cessive portion may be treated as a
dividend or interest, or in whatever
other manner is appropriate.
This article is subject to the saving
clause of paragraph (3) of Article 5
(General Rules of Taxation). There­
fore, royalties derived by a citizen of
the Contracting State in which the
royalty arises may be taxed by that
Contracting State without regard to
this article.
Article 14. Capital Gains
Under paragraph (1), a resident of
one Contracting State will be exempt
from tax by the other Contracting
State on gains from the sale, exchange,
or other disposition of capital assets,
e. g., stock or securities. However, the
exemption does not apply if (1) the
gain is derived from the sale, exchange
or other disposition of property de­
scribed in Article 7 (Income from
Real Property) situated within the
other Contracting State; (2) the re­
cipient of the gain, being a resident of
one
Contracting State, has a perma­
nent establishment in the other Con­
tracting State and the property giving
rise to the gain is effectively connected
with the permanent establishment; or
(3) the recipient of the gain, being an
individual resident of one Contracting
State, is present in the other Contract­
ing State for a period or periods ag­
gregating 183 days or more during the
taxable year. The term “day” for pur­
poses of this article and the other
physical presence tests contained in
the Convention with regard to an in­
dividual means a calendar day during
any portion of which the individual is
physically present in the relevant Con­
tracting State.
If the recipient of the gain is a citi­
zen of the other Contracting State,
that Contracting State may tax the
recipient without regard to this article
because of the saving clause of para­
graph (3) of Article 5 (General Rules
of Taxation). Where Articles 9 (Ship­
ping and Air Transport) or 13 (Roy­
alties) apply to gains derived from the
sale, exchange, or other disposition of
rights or property which are covered
by those articles, this article does not
apply to such gains.
Under paragraph (2), Article 7
(Income from Real Property) applies
to real property gains and Article 8
(Business Profits) applies to gains
which are effectively connected with
a permanent establishment which the
recipient has in the other Contracting
State.
A
rticle 15. Independent
Personal Services
The Convention generally deals
with income from personal services in
two articles, distinguishing between in­
dependent and dependent personal
services. The Convention does not
have separate rules applicable to en­
tertainers, and their personal service
income will be treated either under
this article or Article 16 (Dependent
Personal Services).
Under paragraph (1), income de­
rived by a resident of one Contracting
State in respect of professional services
or other independent activities may be
taxed by that Contracting State. How­
ever, under paragraph (2) such in­
come derived by an individual who is
a resident of one Contracting State
from the performance of personal
services in an independent capacity in
the other Contracting State may also
be taxed by that other Contracting
State if the individual is present
therein for a period or periods aggre­
gating 183 days or more in the taxable
year. Under the saving clause of para­
graph (3) of Article 5 (General Rules
of Taxation), the other Contracting
State may also tax any individual who
is a citizen of that Contracting State
without regard to this article.
The terms “professional services or
other independent activities” and
“personal services in an independent
capacity” are synonymous in meaning,
denoting services performed by an in­
dividual in an independent capacity
(for his own account) where he re­
ceives the income and bears the losses
arising from such services. If an indi­
vidual is an independent contractor he
is considered as rendering such serv­
ices. Under paragraph (3), profes­
sional services include especially inde­
pendent scientific, literary and artistic
activities, as well as independent ac­
tivities of physicians, lawyers, engi­
neers, architects, dentists, journalists
and others performing personal serv­
ices as sole proprietors or partners.
Article 16. Dependent Personal
Services
Under paragraph (1), salaries,
wages, and other similar remuneration
derived by a resident of one Contract­
ing State in respect of an employment
will be taxable only by that Contract­
ing State unless the employment is ex­
433

erased in the other Contracting State.
If the employment is exercised in the
other Contracting State, the remuner­
ation derived therefrom may also be
taxed by that other Contracting State.
However, paragraph (2) eliminates
the other Contracting State’s right to
tax if (a) the recipient is present in
that other Contracting State for a pe­
riod or periods aggregating less than
183 days during the taxable year con­
cerned; (b) the remuneration is paid
by, or on behalf of, an employer who
is not a resident of the other Contract­
ing State; and (c) the remuneration is
not borne as such by a permanent es­
tablishment which the employer has
in the other Contracting State. Such
income may nevertheless be taxed by
that other Contracting State without
regard to this article if the recipient is
a citizen of that Contracting State, be­
cause of paragraph (3) of Article 5
(General Rules of Taxation).
It is intended that for purposes of
the Convention wages, salaries and
other similar remuneration include in­
come from services performed by an
officer of a corporation or company.
Under paragraph (3), remunera­
tion derived by an individual from the
performance of labor or personal serv­
ices performed as an employee aboard
ships or aircraft operated by a resident
of one Contracting State in interna­
tional traffic will, notwithstanding
paragraph (2), be exempt from tax
by the other Contracting State if such
individual (even if a resident of a
State other than a Contracting State)
is a member of the regular comple­
ment of the ship or aircraft
Article 17. Teachers
Paragraph (1) provides that, if a
resident of one Contracting State is
invited by the other Contracting State,
a political subdivision or local author­
ity thereof, or by a university or other
recognized educational institution in
that other Contracting State to come
to that other Contracting State for a
period not expected to exceed two
years for the purpose of teaching or en­
gaging in research, or both, at a uni­
versity or other recognized educational
institution, and if such resident comes
to that other Contracting State pri­
marily for such purpose, his income
from personal services for teaching or
research at the university or education­
al institution will be exempt from tax
by that other Contracting State for a
period not exceeding two years from
the date of his arrival in that other
Contracting State.
Since a temporary visit may be of
such a duration that an individual
may lose his status as a resident of the
Contracting State of which he was a
resident at the time he became eligible
for the benefits of this article, the in­
dividual need only be a resident of
such Contracting State at the begin­
ning of his visit. However, if the in­
dividual becomes a citizen of, or ac­
quires immigrant status in, the other
Contracting State, that other Con­
tracting State may tax the individual
without regard to this article. See
paragraphs (3) and (4) (b) of Article
5 (General Rules of Taxation). If the
individual’s visit exceeds a period of
two years from the date of his arrival,
the exemption applies only to the in­
come received by the individual before
the expiration of such two year period.
The article does not apply to in­
come from research undertaken not
in the public interest but primarily for
the private benefit of a specific person
or persons.
Article 18. Students and
Trainees
Paragraph (1) provides that an in­
dividual who is a resident of one Con­
tracting State at the time he becomes
temorarily present in the other Con­
tracting State and who is temporarily
present therein for the primary pur­
pose of studying at a university or
other recognized educational institu­
tion; securing training required to
qualify him to practice a profession or
professional specialty; or studying or
doing research as a recipient of a
grant, allowance, or award from a
governmental, religious, charitable,
scientific, literary, or educational or­
ganization, will be exempt from tax
by that other Contracting State for a
period not exceeding five taxable years
from the date of his arrival in that
other Contracting State on:
(1) Gifts from abroad for the pur­
pose of his maintenance, education,
study, research, or training;
(2) The grant, allowance, or award;
(3) Any other payment from the
Contracting State of which the indi­
vidual is a resident, except income
from the performance of personal
services; and
(4) Income from personal services
performed in the other Contracting
State not in excess of $2, 000 or its
equivalent in Polish zlotys for any tax­
able year.
Under paragraph (2), an individ­
ual who is a resident of one Contract­
ing State at the time he becomes tem­
porarily present in the other Contract­
ing State as an employee of, or under
contract with, a resident of the first-
mentioned Contracting State, for the
primary purpose of acquiring techni­
cal, professional, or business experi­
ence from a person other than that
resident of the first-mentioned Con­
tracting State or other than a person
related to such resident, or studying
at a university or other recognized
educational institution in that other
Contracting State, will be exempt
from tax by that other Contracting
State on income from personal services
not in excess of $5, 000 or its equivalent
in Polish zlotys for a period not ex­
ceeding one year.
Under paragraph (3), an individ­
ual who is a resident of one Contract­
ing State at the time he becomes tem­
porarily present in the other Contract-
inging State and who is temporarily
present therein for a period not ex­
ceeding one year, as a participant in
a program sponsored by the other
Contracting State, for the primary
purpose of training, research, or study,
will be exempt from tax by the other
Contracting State with respect to his
income from personal services in re­
spect of such training, research, or
study performed in that other Con­
tracting State in an aggregate amount
not in excess of $10, 000 or its equiva­
lent in Polish zlotys.
434

The first sentence of paragraph (4)
provides that the benefits provided in
paragraph (1) and the benefits pro­
vided under Article 17 (Teachers),
when taken together, may extend only
for such period of time, not to exceed
five taxable years from the date of the
individual’s arrival, as may reasonably
or customarily be required to effectu­
ate the purpose of the visit. The sec­
ond sentence of paragraph (4) makes
it clear that the benefits provided by
Article 17 (Teachers) will not be
available to an individual if, during
the immediately preceding period, the
individual enjoyed the benefits pro­
vided by paragraph (1).
If an individual qualifies for the
benefits of more than one of the pro­
visions of Articles 17 (Teachers) and
18 (Students and Trainees), such in­
dividual may choose the most favor­
able provision but may not claim the
benefits of more than one provision in
any taxable year as a means of avoid­
ing the limitations provided. Thus, for
example, an individual who comes to
the other Contracting State for the
primary purpose of studying may be
able to qualify under either paragraph
(2) or (3). However, he cannot com­
bine the maximum exclusion limits in
those two paragraphs to exclude
$15, 000 during the taxable year. If
the individual becomes a citizen of,
or acquires immigrant status in, the
other Contracting State, that other
Contracting State may tax the indi­
vidual without regard to this article.
See paragraphs (3) and (4) (b) of
Article 5 (General Rules of Taxation).
Article 19. Governmental
Functions
Under this article, wages, salaries,
and similar remuneration, including
pensions, annuities or similar benefits,
paid from public funds of one Con­
tracting State to a citizen of that Con­
tracting State for labor or personal
services performed as an employee of
the national government of that Con­
tracting State, or any agency thereof,
in the discharge of functions of a
governmental nature will be exempt
from tax by the other Contracting
State.
In order to avoid a potential con­
flict as to what constitutes govern­
mental functions, paragraph (2) pro­
vides that labor or personal services
performed by a citizen of one Con­
tracting State shall be treated by the
other Contracting State as performed
in the discharge of governmental func­
tions if such labor or personal services
would be treated under the internal
laws of both Contracting States as so
performed. Thus, compensation paid
in connection with industrial or com­
mercial activity is treated the same
as compensation received from a pri­
vate employer. This article does not
include remuneration paid by a politi­
cal subdivision or a local authority
thereof within the exemption.
If the citizen becomes a citizen of,
or acquires immigrant status in, the
other Contracting State, that other
Contracting State may tax the indi­
vidual without regard to this article.
See paragraph (3) and (4) (b) of
Article 5 (General Rules of Taxa­
tion).
Article 20. Relief from Double
Taxation
In order to avoid double taxation
each Contracting State agrees in this
article to provide a credit against its
taxes for taxes paid to the other Con­
tracting State.
Under paragraph (1) Poland will
allow to a resident of Poland as a
credit against the Polish tax the ap­
propriate amount of taxes paid to the
United States, in accordance with the
provisions and subject to the limita­
tions of the law of Poland (as it may
be amended from time to time with­
out changing the general principles
of paragraph (1)).
Under paragraph (2), in accord­
ance with the provisions and subject
to the limitations of United States law
(as it may be amended from time to
time without changing the general
principles of paragraph (2)), the
United States will allow to a citizen
or resident of the United States as a
credit against United States tax the
appropriate amount of taxes paid to
Poland and, in the case of a United
States company owning at least ten
percent of the voting power (i. e.,
voting stock) of a Polish company
from which it receives dividends in
any taxable year, will allow credit
for the appropriate amount of taxes
paid to Poland by the Polish company
paying the dividends with respect to
the profits out of which the dividends
are paid. The appropriate amount
shall be based upon the amount of
tax paid to Poland, but the credit
shall not exceed that portion of the
United States tax which such citizen’s
or resident’s net income (i. e., taxable
income) from sources within Poland
or on income from sources outside
of the United States bears to his en­
tire net income for the same taxable
year. This provision does not require
the United States to maintain a per­
country and overall limitation in the
future so long as the general principle
of a foreign tax credit remains in
effect.
For purposes of applying the United
States credit in relation to taxes paid
to Poland, the taxes referred to in
paragraph (2) (a) of Article 2 (Taxes
Covered by the Convention) will be
considered to be income taxes. It is
intended that any income of a resi­
dent of the United States which has
been subject to tax by Poland in ac­
cordance with the Convention will be
treated as income from Polish sources.
Article 21. Nondiscrimination
Paragraph (1) provides that a
citizen of one Contracting State who
is a resident of the other Contracting
State shall not be subjected in that
other Contracting State to any taxa­
tion or any requirement connected
therewith which is other or more
burdensome than the taxation and
connected requirements to which
citizens of that other Contracting State
in the same circumstances are or may
be subjected. The determination
whether there is a greater burden is
to be made by comparing the treat­
ment of individuals who are in com­
parable positions. Thus, for example,
435

a citizen of Poland who is a resident
of the United States and who other­
wise meets the requirements specified
in section 911 of the Code would
under this article be eligible for the
benefits of section 911 even though
not a citizen of the United States.
On the other hand, just as a United
States citizen who becomes a non­
resident alien at any time during a
taxable year or whose spouse is a
nonresident alien at any time during
a taxable year cannot file a joint re­
turn for that year, a Polish citizen
would not be entitled to file a joint
return with his spouse if either is a
nonresident alien at any time during
the taxable year.
Paragraph (2) provides that one
Contracting State may not impose
more burdensome taxes on permanent
establishments of residents of the other
Contracting State than it generally
imposes on permanent establishments
of residents of third States carrying
on the same activities.
Paragraph (3) prohibits one Con­
tracting State from subjecting a com­
pany of such Contracting State the
capital of which is wholly or partly
owned or controlled, directly or in­
directly, by one or more residents of
the other Contracting State to any
taxation or any requirement connected
with taxation which is other or more
burdensome than those generally ap­
plicable to companies of the first-men­
tioned Contracting State carrying on
the same activities, the capital of
which is wholly or partly owned or
controlled by one or more residents of
a third State.
The criterion in paragraphs (2)
and (3) is in terms of permanent
establishments of and companies
owned or controlled by, residents of
third States, rather than to citizens
or residents of that Contracting State,
because the Polish taxation of other
foreign businesses is a more relevant
comparison than Polish taxation of
domestic businesses which are fre­
quently state enterprises.
However, paragraphs (2) and (3)
do not require a Contracting State to
grant to permanent establishments of
436
residents of the other Contracting
State, or to companies owned or con­
trolled by such residents, tax benefits
granted by special agreements, e. g.,
bilateral income tax conventions, to
residents of a third State or companies
owned or controlled by such residents.
Paragraph (4) of this article and
paragraph (4) of Article 2 (Taxes
Covered by the Convention) make
clear that for this article the term
“taxation” means taxes of every kind
and description (whether imposed at
the national, state or local level),
with the exception of the Polish
Treasury residence registration fee
(oplata skarbowa za zameldowanie).
This registration fee is a nominal an­
nual fee required of both Polish citi­
zens and aliens. The fee is higher for
aliens than for Polish citizens (in
1973, approximately $1. 00 for aliens
as compared to approximately ten
cents for citizens). However, in light
of its nominal nature, the United
States consented to its exclusion from
the nondiscrimination article. Para­
graph (4) specifically states that the
contribution for the retirement fund
(skladka na cele emerytalne) made by
Polish citizens will be regarded as a
tax.
Article 22. Mutual Agreement
Procedure
When a resident of one Contracting
State considers that actions of one or
both Contracting States result or will
result for him in taxation not in ac­
cordance with the Convention, such
resident may, notwithstanding the
remedies provided by the national laws
of the Contracting States, present his
case to the competent authority of the
Contracting State of which he is a
resident or citizen. A resident of a
Contracting State need not, although
it is anticipated that in the normal
situation he will, exhaust his other
administrative or judicial remedies
prior to resorting to the use of the
mutual agreement procedure. If the
objection appears to it to be justified
and if it is not able itself to arrive
at an appropriate solution, that com­
petent authority must endeavor to
come to an agreement with the com­
petent authority of the other Con­
tracting State with a view to the
avoidance of taxation not in accord­
ance with the Convention.
Paragraph (3) requires the com­
petent authorities of the two Contract­
ing States to endeavor to resolve by
mutual agreement any difficulties or
doubts arising as to the interpretation
or application of the Convention, and
they may consult together for the
elimination of double taxation in
cases not provided for in the Conven­
tion. Thus, lor example, the com­
petent authorities may agree to the
same attribution of profits to an enter­
prise of one Contracting State and its
permanent establishment situated in
the other Contracting State; the same
allocation of income, deductions,
credits or allowances between an en­
terprise of one Contracting State and
a related person and to the readjust­
ment of taxes imposed by each Con­
tracting State to reflect such alloca­
tion; the same determination of the
source of particular items of income;
and the same characterization of par­
ticular items of income.
Under paragraph (4), in imple­
menting the provisions of this article,
the competent authorities may com­
municate with each other directly
for the purpose of reaching an agree­
ment in the sense of this article.
Under paragraph (5), in cases in
which the competent authorities reach
an agreement, taxes will be imposed
in accordance with the agreement.
This permits the issuance of a refund
or credit notwithstanding procedural
barriers otherwise existing under a
Contracting State’s law, such as the
statute of limitations.
Article 23. Exchange of
Information
Paragraph (1) provides for a sys­
tem of administrative cooperation be­
tween the competent authorities of
the two Contracting States by requir­
ing an exchange of information neces­
sary for carrying out the provisions of
the Convention or for the prevention
of fraud or for the administration of

statutory provisions concerning taxes
to which the Convention applies. The
competent authorities may exchange
information in connection with tax
compliance generally, not merely il­
legal acts or crimes.
Under paragraph (2) information
exchanged must be treated as secret
except that it may be disclosed to any
person concerned with, or made part
of a public record with respect to, the
assessment, collection, enforcement of,
or litigation with respect to, the taxes
to which the Convention applies.
Thus, disclosure is not prohibited as
a part of a public proceeding before
a court or administrative body.
The article provides two limitations
on what kind of information can be
exchanged. Under paragraph (1), the
information must be of a class that
can be obtained under the laws and
administrative practices of each Con­
tracting State with respect to its own
taxes. Thus, a Contracting State re­
quested to furnish information will
use the standard it uses in the en­
forcement of its own laws by its. ad­
ministrative and judicial authorities,
treating the tax of the Contracting
State with respect to which the re­
quest relates as if it were a tax of the
Contracting State requested to furnish
the information and were being im­
posed by such Contracting State. Un­
der paragraph (3), no information will
be exchanged which would be con­
trary to public policy. However, in­
formation which may be furnished in
accordance with this article should
not be withheld by reason of any doc­
trine of law under which international
judicial assistance is not accorded in
tax matters.
Under paragraph (4), depositions
of witnesses and copies of unedited
original documents (including books,
papers, statements, records, accounts,
or writings) shall be provided by the
competent authority of a Contracting
State if specifically requested by the
competent authority of the other Con­
tracting State to the same extent that
such depositions and documents can
be obtained under the laws and ad­
ministrative practices of each Con­
tracting State with respect to its own
taxes. The standard to be used by a
Contracting State, when requested to
provide such depositions and docu­
ments, is the same standard as de­
scribed above under paragraph (1).
Paragraph (5) provides for the ex­
change of information on either a
routine basis or on request with refer­
ence to particular cases. The com­
petent authorities may agree on the
list of information to be furnished on
a routine basis.
Article 24. Diplomatic and
Consular Officers
This article provides that nothing
in the Convention will affect the fiscal
privileges of diplomatic or consular
officials under the general rules and
norms of international law or under
the provisions of special agreements.
This is merely a special case of the
general rule provided in paragraph
(2) of Article 5 (General Rules of
Taxation).
Article 25. Entry into Force
This article provides that the Con­
vention is subject to ratification and
for the exchange of instruments of
ratification. The Convention will enter
into force thirty days after the date
of exchange of such instruments of
ratification. The provisions of the
Convention shall first have effect with
respect to income of calendar years or
taxable years beginning (or in the case
of taxes payable at source, payments
made) on or after January 1, 1974. It
is intended for purposes of this article
and Article 26 (Termination) that the
reference to calendar years applies
only to cases where the taxable year
is the calendar year.
Article 26. Termination
Paragraph (1) provides that the
Convention will continue in effect
indefinitely, but that it may be termi­
nated by either Contracting State at
any time after five years from the
date it enters into force. A Contracting
State seeking to terminate the Con­
vention must give at least six months
prior notice of termination. Under
paragraph (2), if the Convention is
terminated, such termination will be
effective with respect to income of
calendar years or taxable years be­
ginning (or, in the case of taxes pay­
able at source, payments made) on
or after January 1 next following the
expiration of the six month period.
Subpart B. —Legislation and
Related Committee Reports
Public Law 95-19
95th Congress, H. R. 48001
April 12, 1977
An Act to extend the Emergency
Unemployment Compensation Act of
1974, and for other purposes.
Be it enacted by the Senate and
House of Representatives of the
United States of America in Congress
assembled.
Section 1. Short Title.
This Act may be cited as the “Emer­
gency Unemployment Compensation
Extension Act of 1977. ”
TITLE I — AMENDMENTS TO
THE EMERGENCY UNEM­
PLOYMENT COMPENSATION
PROGRAM
Sec. 101. Extension of Program.
(a) General Rule. —Section 102
(f) (2) of the Emergency Unemploy­
ment Compensation Act of 1974 is
amended to read as follows:
“(2) No emergency compensation
shall be payable to any individual
under an agreement entered into
under this Act—
“(A) for any week ending after Oc­
tober 31, 1977, or
“(B) in the case of an individual
who (for a week ending after the be­
ginning of his most recent benefit year
and before October 31, 1977) had a
week with respect to which emergency
compensation was payable under such
agreement, for any week ending after
January 31, 1978. ”
1 This publication of the law is restricted to excerpts
involving tax matters; Senate Report No. 95-67, page
441; Conference Report No. 95-158, page 448; House
Report No. 95*82 is not published.
437