Article 19 - GOVERNMENT SERVICE

   Article 20 deals with the taxation of income (including
pensions) from governmental employment. It generally follows the
corresponding provisions of the OECD Model.

TURKEY 255

Supp. No. 6(1998)

Paragraph 1

   Subparagraphs a) and b) of paragraph 1 deal with the taxa­

tion of government compensation other than a pension. Subpara­

graph a) provides the general rule that wages, salaries, and
other remuneration paid by one of the Contracting States or by
its political subdivisions or local authorities to any individual

are generally exempt from tax by the other State, if the compen­

sation is in respect of governmental services rendered to that

State, subdivision or authority. Under subparagraph b), however,

such payments are taxable only in the other State if the services
are rendered there and if the individual is a resident of that

State who is either a national (Ju., in the case of the United States, a citizen) of that State or who was a resident of that State prior to taking the governmental job (or who otherwise did not become resident of that State solely for purposes of taking the job). Thus, an individual who, after establishing U.S. residence, is hired by the Turkish Embassy in Washington, would be subject to U.S. (and not Turkish) tax on his Turkish salary. It is understood that the rule of subparagraph, b) does not apply

to the spouse of a government employee described in paragraph 1
if the spouse becomes employed by the sending State after taking
up residence in the host State.

   Paragraph. 2

   Paragraph 2 deals with the taxation of a pension paid by, or
out of funds created by, one of the States or a political subdi­
vision or a local authority thereof to an individual in respect

of services rendered to that State or subdivision or authority.

Subparagraph a) provides the general rule that such a pension is taxable only by the paying State. Subparagraph b), however,

provides an exception under which such a pension is taxable only
in the residence State if the individual is a resident of, and a
national of, that other State. If a Government pension otherwise

covered by this paragraph is in the form of a social security benefit, paragraph 2 of Article 18 (Pensions and Annuities),

rather than this Article, applies.

Paragraph 3

 -68­

TURKEY 256

Supp. No. 6 (1998)

   Paragraph 3 provides that the provisions of Articles 15
(Dependent Personal Services), 16 (Directors' Fees), and 18
(Pensions and Annuities) shall apply to remuneration and pensions
in respect of services rendered in connection with a business
carried on by one of the States or a political subdivision or a
local authority thereof.

   Relation to other articles

   Under paragraph 4 b) of Article 1 (Personal Scope), the
saving clause (paragraph 3 of Article 1) does not apply to the
benefits conferred by one of the States under Article 20 if the
recipient of the benefits is neither a citizen of, nor has
immigrant status in, that State. Thus, for example, a Turkish
resident who receives a pension paid by Turkey in respect of

services rendered to the Government of Turkey shall be taxable on this pension only in Turkey unless the individual is a U.S.

citizen or acquires a U.S. green card.