Article 17. ARTISTES AND ATHLETES

This Article provides exceptions to the rules of Articles 14 (Independent Personal Services) and 15 (Dependent Personal

Services) for remuneration derived **by** an entertainer (such as a
theatre, motion picture, radio or television artiste or a mu­

sician) or an athlete. The remuneration of producers, directors,

technicians, and others who are not entertainers or athletes is

covered by Articles 14 and 15.

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When an individual who is a resident of one of the

Contracting States performs as an entertainer or athlete in the
other Contracting State, the latter State may tax the remunera­

tion for such services if the gross amount, including reimbursed expenses, exceeds $7,500 U.S. dollars. This is a compromise be­ tween Tunisia's preferred position, which is to tax such income

at source with no threshold (as in the **OECD** and **UN** models), and

the U.S. model, which allows a higher threshold.

Paragraph 2 provides that, where income for the performance

of personal services by an entertainer or athlete does not accrue to that individual but is diverted to another person, the income may be taxed in the State where the services are performed, not­ withstanding the provisions of Articles 7 (Business Profits), 14 (Independent Personal Services) and 15 (Dependent Personal Services). This is an anti-abuse rule, intended to have the same effect as the corresponding provision in the U.S. model. Article 18. PENSIONS, ETC.

This Article concerns the taxation of pensions (other than
for government service), social security benefits, annuities,
alimony, and child support payments derived **by** a resident of a

Contracting State. Paragraphs la), 2 and 3 provide for exclusive taxation by the country of residence of pensions (other than a public pension for

services performed in discharging governmental functions) annui­
ties, and alimony. Notwithstanding this rule, the United States

may tax such income derived by U.S. citizens who are residents of

Tunisia in accordance with paragraph 2 of Article 22 (General

Rules). The Article defines the terms "annuities" and "alimony", but leaves the definition of "pensions" to domestic law.

Paragraph **1b)** provides that social security benefits paid **by**
one Contracting State to a resident of the other Contracting

State may be taxed **by** both States. The country of residence is

obligated to avoid double taxation in accordance with Article 23.

In the case of the United States, payments under the Railroad

Retirement Act are treated as social security payments.

Under paragraph 4, child support payments are exempt from tax in both States. Under U.S. law, such payments are not taxable to

the recipient (and are not deductible **by** the payor). Under
Tunisian law such payments, like alimony, are taxable to the
recipient (and deductible **by** the payor). Thus, a rule of taxa­

tion only by the residence country would lead to double taxation of child support payments made by a U.S. resident (not deductible

**by** the payor for **U.S.** tax) to a Tunisian resident (taxable **by**
Tunisia to the recipient). The Article avoids that result **by**
providing that neither Contracting State will tax child support
payments made to a resident of the other State. This rule does

not require the United States to allow a deduction to the payor; the exemption provided applies to the recipient.

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Article 19. GOVERNMENTAL FUNCTIONS

This Article concerns the taxation of remuneration and pensions paid to individuals out of public funds as compensation for services rendered in the discharge of governmental functions.

Paragraph **1** deals with remuneration other than pensions.
Payments **by** a Contracting State or a political subdivision or
local authority thereof to a citizen **of** that State for services
rendered in discharging governmental functions may not be taxed
in the other State. This rule also appears in the **U.S.** Model.

Thus, for example, a U.S. citizen working at the U.S. Embassy In

Tunis will be exempt from Tunisian tax on the compensation for

those services. A citizen of Tunisia or of a third country simi­

larly employed may be taxed **by** Tunisia in accordance with its

domestic law and any other international obligations, such as the Vienna Convention on Diplomatic Relations; typically, such individuals will be host-country residents who are locally hired.

Paragraph 2 provides a different rule for pensions. Pensions paid out of public funds of a Contracting State or political sub­

division or local authority thereof to an individual who is a

resident of the other Contracting State for past services render­

ed in the discharge of governmental functions may be taxed only

in the State of residence, unless the individual is a citizen of the paying State. This rule is a departure from that in the U.S.

Model, and represents a concession to Tunisia's strong position

that its residents deriving pensions (whether for private or

public sector employment) should be taxed on the same basis with­ out regard to where the pension originates. Thus, for example, a

former **U.S.** Government employee who after retirement becomes a
resident of Tunisia will be subject only to Tunisian income tax
on his pension, unless the individual is .a **U.S.** citizen. If he
is a **U.S.** citizen, the United States may also tax, and Tunisia
will provide relief from double taxation in accordance with

Article 23. Paragraph 3 makes it clear that remuneration or pensions paid

**by** a Contracting State or a political subdivision or local au­
thority thereof with respect to services rendered in connection
with a trade or business carried on **by** either government or **by**
a political subdivision or local authority thereof are not
covered **by** this Article but **by** the applicable provisions of

Articles 14 (Independent Personal Services), 15 (Dependent

Personal Services), or **17** (Artistes and Athletes). This treat­
ment is consistent with the **U.S.,** **OECD** and **U.N.** Models, all of
which exclude payments in respect of services rendered in con­

nection with a business carried on **by** the governmental entity
paying the compensation or pension. Each Contracting State
applies the rules of its domestic law in determining whether

services performed in its territory constitute governmental functions or are performed in connection with a trade or business.

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An exception to the saving clause in paragraph 3b) of Article

22 (General Rules), preserves the benefit of this Article for a

resident of a Contracting State who is not a citizen or immigrant of that State.

Thus, for example, the **U.S.** may not tax the salary of a

Tunisian citizen who is a U.S. resident without immigrant status,

if the amount is paid **by** the government of Tunisia for services

in discharging governmental functions. Article 20. STUDENTS AND TRAINEES

Paragraph **1** of this Article provides special tax rules for
individual residents of one of the Contracting States who visit
the other Contracting State for the purpose of full-time educa­

tion or training. Education or training includes research, pro­

vided in each case that the individual participates in a fulltime program consisting of study, research or training or any

combination of such activities.

The host State agrees to exempt such individuals from tax on: a) remittances from abroad for their study or training, including

amounts for living expenses during the period of study or

training; b) an award received from a non-profit organization (in

the case of a **U.S.** organization, one which qualifies under Code
section 501(c)(3); and c) not more than $4,000 per year of re­

muneration for personal services. If the amount earned exceeds $4,000, the exemption applies to the first $4,000. The excess is taxable in accordance with domestic law, taking into account any personal exemptions and deductions allowable under domestic law.

The period of exemption for individuals who qualify under
paragraph **1** may not exceed five years from the individual's date

of arrival in the other State. An exception to the saving clause contained in paragraph 3 b)

of Article 22 (General Rules), preserves the benefit of this
Article for a resident of a Contracting State who does not have

the status of citizen or immigrant of that State. Thus, for ex­ ample, the U.S. may not tax a student, apprentice or trainee who was a Tunisian resident immediately before arriving in the United States and who becomes a U.S. resident without immigrant status, if the amount paid to the individual is exempt under Article 20. Article 21. OTHER INCOME

In general, any item of income derived **by** a resident of **a**
Contracting State and not dealt with in one of the preceding
articles is taxable only in the State of residence. An item of

income is "dealt with" in an Article when items in the same cate­ gory are addressed or defined in the Article, whether or not any

treaty benefit is granted to that item of income. This Article
deals both with types of income which are not dealt with

elsewhere, such as, for example, lottery winnings, and also with

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types of income dealt with elsewhere in the Convention, but from sources in third States, and, therefore, not covered by the other Articles. The exclusive right of taxation accorded to the resi­

dence State under paragraph **1** applies whether or not the resi­

dence State exercises its right to tax the income covered by this Article.

The general rule extends to income from real property (as

defined in paragraph 2 of Article 6 (Income From Real Property), for example, real property located in a third State, even if the

real property is part of the business property of a permanent
establishment or fixed base which the resident maintains in the

other Contracting State. In such a case, the other State may not

impose tax. However, other income derived from a right or
property that is effectively connected with a permanent es­
tablishment or fixed base which the resident maintains in the
other Contracting state may be taxed in that other State in

accordance with Article 7 (Business Profits) or Article 14 (Independent Personal Services). Thus, in general, third-country

income which is attributable to a permanent establishment main­
tained in the United States **by** a resident of Tunisia would be
taxable **by** the United States. However, if a Tunisian resident

derives income from real property located in a third State which

is attributable to the resident's permanent establishment or

fixed base in the United States, only Tunisia and not the United States may tax that income.

This Article is subject to the saving clause **of** paragraph 2
of Article 22 (General Rules) of the Convention. Thus, the
United States may tax the income of a resident of Tunisia not
dealt with elsewhere in the Convention, if that resident is a

citizen of the United States.