ARTICLE 18 — U.S. Income Tax Treaty

Amounts Received For Furnishing Personal Services of Others

Paragraph (1) provides that, notwithstanding the provisions of Article 8 (Business Profits), amounts received by a resident of one Contracting State in consideration of furnishing in the other Contracting State the personal services of one or more other persons, including a public entertainer referred to in Article 17 (Public Entertainers), may be subject to tax under the taxation laws of each Contracting State to the extent that: the person for whom the services were furnished designated the person or persons who would render the services, whether or not he had the legal right to do so and whether or not the designation was made formally; the person for whom the services were furnished had the right to designate the person or persons who would render the services; or, by reason of the facts and circumstances, the arrangement for personal services had the effect of designating the person or persons who would render the services; and the resident of the first-mentioned Contracting State directly or indirectly pays compensation for such services to any person, other than another resident of the first-mentioned Contracting State or of that other Contracting State who is subject to tax on such compensation. If this paragraph applies, the amounts received for providing personal services of other individuals in the other

Contracting State may be taxed by that other Contracting State even though not attributable to a permanent establishment.

Paragraph (2) provides that paragraph (l) will not apply if it is established to the satisfaction of the competent authority of that other Contracting State with respect to any amount received that neither the creation nor organization of the resident of the first-mentioned Contracting State (where such resident is a corporation or other entity) nor the furnishing of the services through such resident has the effect of a substantial reduction in income, war profits, excess profits, or similar taxes. The taxes referred to in the preceding sentence are those enumerated in Article 1 (Taxes Covered) which are imposed by the two Contracting States.