Article 20 (Teachers)

Paragraph 1

Paragraph 1 provides rules regarding the taxation of teachers and researchers temporarily visiting one of the Contracting States. Persons who meet the tests of the article will be exempt from tax with respect to any remuneration for such teaching or research in the Contracting State they 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 be a resident, within the meaning of paragraph 1 of Article 4 (Residence), of the Contracting State other than the host Contracting State. The reference to paragraph 1 of Article 4 is intended to be a reference to the general rule for residence before the tie-breaker rules of paragraphs 2 and 3 of Article 4 are applied. Thus, an individual is a resident of a Contracting State for purposes of Article 20 and therefore may be entitled to benefits under Article 20 even though he is not a resident of that Contracting State for other purposes of the Convention under paragraphs 2 or 3 of Article 4. Individuals visiting one Contracting State (i.e., the host Contracting State) are treated as residents of the other Contracting State under paragraph 1 of Article 4 if they are liable to tax in that other Contracting State on the basis of the factors listed in paragraph 1 of Article 4. In the case of the United States, individuals who are United States citizens or aliens lawfully admitted for permanent residence in the United States are liable to tax in the United States on their world-wide income and therefore are residents of the United States under paragraph 1 of Article 4 even if they are not physically present in the United States. In the case of Japan, individuals who are employed by the Japanese Government are liable to tax in Japan on their world-wide income and therefore are residents of Japan under paragraph 1 of Article 4 even if they are not physically present Japan.

Second, the purpose of the visit must be to teach or conduct research at a university, college, school, or other educational institution in the host Contracting State. The phrase “university, college, school, or other educational institution” is understood not to require that the educational institution be accredited by an authority in the host Contracting State.

A teacher or researcher who satisfies these two conditions will be exempted from tax by the host Contracting State on any remuneration for such teaching or research for a period not exceeding two years from the date he first visits that Contracting State temporarily for the purpose of teaching or conducting research. Since this two year period is determined from the date he first visits the host Contracting State, periodic vacations outside the host Contracting State, or a brief return to the other Contracting State will not toll the running of the two year period. If the two-year period beginning from the date of his arrival is exceeded, the exemption will apply only for the first two years and only if the visit is temporary.

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A person who meets the qualifications for this exemption may again claim its benefits if he first re-establishes his domicile in the other Contracting State. In such case, the person claiming these benefits on a subsequent occasion must first satisfy the competent authority of the host Contracting State that he had become a domiciliary of the other Contracting State for a substantial period of time (normally at least one year).

Paragraph 2

Pursuant to paragraph 3, this Article only applies to income from research undertaken in the public interest which is not primarily for the benefit of one or more specific persons. For example, research projects which are undertaken to discover or perfect product processes, designs, etc., which are expected to be commercially exploited by the researcher or his present (or former) employer do not qualify under this Article.

Relation to other Articles