Article 16 - DIRECTORS' FEES

   This Article provides that a Contracting State may tax the
fees paid by a company that is a resident of that State for
services performed in that State by a resident of the other State
as a director of the company. Only the State of residence of
the director, however, may tax any portion of the remuneration
that is derived in respect of services performed outside the
other Contracting State.

   The fees covered by this Article include directors' fees as
well as other similar payments. For this purpose, "similar
payments" include fixed salaries (or the portion thereof) paid
for services performed as a director (not to include any portion
of such salary paid for performance as an officer).

Relation to other articles

   This rule is an exception to the more general rules of
Article 14 (Independent Personal Services) and Article 15 (Depen­
dent Personal Services). Thus, for example, a U.S. resident who
is a director (and not an employee) of a Turkish company may be
subject to tax in Turkey on his or her director's fee whether or
not the fee is attributable to a fixed base in Turkey and whether
or not he or she is present in Turkey more than 183 days.

                    -60­

TURKEY 248

Supp. No. 6 (1998)

   This Article is subject to the saving clause of paragraph 3
of Article 1 (Personal Scope). Thus, if a U.S. citizen who is a
Turkish resident is a director of a U.S. corporation, the United
States may tax his full remuneration regardless of the place of
performance of his services.