Article 21 of the proposed Convention provides special thresholds to determine when income

derived in connection with the offshore exploration for, and exploitation of, natural resources may be taxed in the source country. The general rule of Article 21 is that all exploitation activities give rise to a permanent establishment while exploration activities create a permanent establishment only if they continue for a period of 120 days in a twelve-month period. Article 21 also provides that salaries and other remuneration of a resident of one Contracting State derived from an employment in connection with offshore activities carried on through a permanent establishment in the other may be taxed by the other State. Other U.S. treaties with countries bordering on the North Sea (e.g., Norway, the United Kingdom, and the Netherlands) have similar articles dealing with offshore activities.

The taxation of income from the performance of personal services under Articles 14 through 17 of the new Convention is essentially the same as that under other recent U.S. treaties with OECD countries. Unlike many U.S. treaties, however, the new Convention, at Article 18, provides for the deductibility of cross-border contributions by temporary residents of one State to pension plans registered in the other State under limited circumstances.