Article 19 provides rules — U.S. Income Tax Treaty

Persons who meet the tests of the article will be exempt from tax with respect to designated classes of income in the Contracting State they are visiting (the “host Contracting State”). Several conditions must be satisfied for an individual to be entitled to the benefits of this article.

First, the visitor must have been, either at the time of his arrival in the host Contracting State or immediately before, a resident of the other Contracting State.

Second, the primary purpose of the visit must be the education or training of the visitor. Thus, if the visitor comes principally to work in the host Contracting State but also is a part-time student, he is not entitled to the benefits of this article, even with respect to any payments he may receive from abroad for his maintenance or education, and regardless of whether or not he is in a degree program. A person who visits the host Contracting State to obtain business training and who also receives a salary from his employer for providing services would not be entitled to the benefits of this article with respect to the payments for services.

The host-country exemption in Article 19 applies only to payments arising outside the host Contracting State that are received by the student, apprentice or business trainee for the purpose of his maintenance, education or training. A payment will be considered to arise outside the host Contracting State if the payer is located outside the host Contracting State. Thus, if an employer from one of the Contracting States sends an employee to the other Contracting State for training, the payments the trainee receives from abroad from his employer for his maintenance or training while he is present in the host Contracting State will be exempt from tax in the host State. Where appropriate, substance prevails over form in determining the identity of the payer. Thus, for example, payments made directly or indirectly by a U.S. person with whom the visitor is training, but which have been routed through a source outside the United States ( e.g., a foreign bank account), are not treated as arising outside the United States for this purpose.

In the case of an apprentice or business trainee, the benefits of this article will extend only for a period of one year from the time that the visitor first arrives in the host Contracting State. If, however, an apprentice or trainee remains in the host Contracting State for a second year, thus losing the benefits of the article, he does not retroactively lose the benefits of the article for the first year.