ARTICLE 21

Other Income

This Article provides in paragraph 1 that, in general, any income of a resident of a Contracting State which is not dealt within the foregoing Articles of the Convention, such as prizes and awards, shall be taxable only by that State. This rule is not confined to income from the other Contracting State, but applies, as well, to income arising in third States.

Paragraph 2 excepts from the rule of paragraph 1 income derived by a resident of a Contracting State which is attributable to a permanent establishment or fixed base of that resident in the other Contracting State (other than income from real property as the term is defined in paragraph 2 of Article 6). In such a case, the income is covered instead under the Articles dealing with business profits (Article 7), or independent personal services (Article 14). Thus, for example, income of a U.S. resident which arises in a third State (other than income from real property in a third State) and which is attributable to a permanent establishment of such person in Barbados would be subject to tax by Barbados.

Paragraph 3 provides that, notwithstanding paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt within the foregoing Articles of the Convention and arising in the other Contracting State may be taxed by that other State.

This Article is subject to the saving clause of paragraph 3 of Article 1 (General Scope). Thus, for example, if a U.S. citizen who is resident in Barbados derives income from a third State, the United States may tax that income notwithstanding the rule in paragraph 1 which gives Barbados exclusive taxing rights over such income of its residents.