Article 18. PRIVATE PENSIONS

AND ANNUITIES

The existing Convention provides that private pensions and annuities derived from sources within one State by an individual resident of the other State are exempt from tax in the State of source. The proposed convention continues the existing rule by provid­ ing that pensions and other similar re­ muneration paid in consideration of past employment, other than pensions coming within the scope of Article 17

(Governmental Functions), and an­ nuities received by a resident of a State will be taxable only in the State of residence.

The proposed Convention also pro­ vides that alimony paid to a resident of a State will be taxable only in the State of residence. A United States resident making alimony payments to a Norwegian resident may deduct such payments when computing his

United States tax liability (unless sec­ tion 71(b) or 682 of the United States Internal Revenue Code applies).

The proposed Convention provides, in addition, that child support pay­ ments made by a resident of one of the States to an individual resident of the other State shall be exempt from tax in that other State.

The term “pensions” is defined as including periodic payments made by reason of retirement or death in con­ sideration for services rendered, or by way of compensation for injuries re­ ceived, in connection with past em­ ployment. The term “annuities” is de­ fined as including a stated sum paid periodically at stated times during life, or during a specified number of years under an obligation to make the pay­ ments in return for adequate and full consideration (other than services ren­ dered). The term “alimony” means periodic payments made pursuant to a

decree of divorce, separate mainte­ nance agreement, or support or sepa­ ration agreement, which is taxable to the recipient under the internal laws of the State of his residence. The term “child support payments” means peri­ odic payments for support of a minor child made pursuant to a decree of divorce, separate maintenance agree­ ment, or support or separation agree­ ment. Article 19. SOCIAL SECURITY

PAYMENTS

This article provides that social se­ curity payments paid by one State to an individual who is a resident of the other State will be taxed only in the first-mentioned State. Also included under this article are other public pensions such as railroad retirement benefits. Neither the existing Conven­ tion nor the OECD Model Conven­

tion contains a comparable provision.