Article 19 (Government Service).

A qualified governmental entity described in subparagraphs (ii) and (iii) may not engage in any commercial activity. Paragraph 4 of Article 1 of the Protocol provides a non-exclusive list of entities that constitute qualified governmental entities. In the case of the United States, the list includes the Federal Reserve Banks, the Export-Import Bank, and the Overseas Private Investment Corporation. In the case of Italy, the list includes La Banca d’Italia (the Central Bank), L’Istituto per il Commercio con l’Estero (the Foreign Trade Institute), and L’Istituto per l’Assicurazione del Credito all’Esportazione (the Official Insurance Institute for Export Credits).

Paragraph 2

Paragraph 2 provides that in the application of the Convention, any term used but not defined in the Convention will have the meaning that it has under the law of the Contracting State whose tax is being applied, unless the context requires otherwise. If the meaning of a term cannot be readily determined under the law of a Contracting State, or if there is a conflict in meaning under the laws of the two States that creates difficulties in the application of the Convention, the competent authorities, pursuant to Article 25 (Mutual Agreement Procedure), may establish a common meaning in order to prevent double taxation or to further any other purpose of the Convention. This common meaning need not conform to the meaning of the term under the laws of either Contracting State.

Although paragraph 2 does not explicitly state that the reference in paragraph 2 to the internal law of a Contracting State means the law in effect at the time the treaty is being applied, not the law as in effect at the time the treaty was signed, this result is understood to apply.

This use of an “ambulatory definition,” however, may lead to results that are at variance with the intentions of the negotiators and of the Contracting States when the treaty was negotiated and ratified. The reference in both paragraphs 1 and 2 to the "context otherwise requiring" a definition different from the treaty definition, in paragraph 1, or from the internal law definition of the Contracting State whose tax is being imposed, under paragraph 2, refers to a circumstance where the result intended by the Contracting States is different from the result that would obtain under either the paragraph 1 definition or the statutory definition. Thus, flexibility in defining terms is necessary and permitted.