Recent Global Developments in International Taxation – Part II

United States (i) FAQs released for streamlined procedures for delinquent US taxpayers overseas

The US Internal Revenue Service (IRS) has released frequently asked questions (FAQs) regarding the streamlined filing compliance procedures for nonresident, non-filer taxpayers, which went into effect on 1st September 2012.

The streamlined procedures were introduced to provide US taxpayers residing overseas, including dual citizens, who have not filed US federal income tax returns or Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts, FBAR) with an opportunity to comply with their tax requirements by filing their delinquent income tax returns for the past 3 years and filing their delinquent FBARs for the past 6 years.

The streamlined procedures are designed for taxpayers who present a low compliance risk, which is generally specified as a tax liability of less than $ 1,500 for each delinquent year.

In addition, the streamlined procedures provide retroactive relief for taxpayers who failed to make a timely election for income deferral on certain foreign retirement and savings plans (e.g., Canadian Registered Retirement Savings Plans) for which relevant treaties allow deferral only if an election is made on a timely basis.

The FAQs include the following clarifications:

• Taxpayers will not be disqualified from admission to the streamlined procedures even if their tax liability exceeds $ 1,500 for any of the 3 years. However, submissions by such taxpayers may be determined to be higher risk, and applicable penalties and an examination may ensue.

• If qualifying taxpayers have been accepted into one of the offshore voluntary disclosure programs (OVDPs) prior to 1st September 2012, they may opt out of the OVDP and request the streamlined procedures

• Qualifying taxpayers may have their case reconsidered under the streamlined procedures even if they have entered into a closing agreement (IRS Form 906) with the IRS under one of the OVDPs. For the streamlined procedures, taxpayers should use IRS Form 1040 (US Individual Income Tax Return), except that taxpayers should use IRS Form 1040X (Amended US Individual Income Tax Return) if they are submitting amended returns for the sole purpose of submitting late-filed IRS Form 8891 (US Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans).

The FAQs indicate a last reviewed or updated date of 27th February 2013.

(ii) IRS issues updated Publication 519 – US Tax Guide for Aliens

The US IRS has released the 2013 revision of Publication 519 (US Tax Guide for Aliens). The publication is dated 7th March 2013 and is intended for use in preparing tax returns for 2012.

Publication 519 provides detailed guidance for resident and non-resident individuals to determine their liability for US federal income tax. Specifically, Publication 519 discusses:

• the rules for determining US residence status (e.g. the US green card test and the US substantial presence test);

• the rules for determining the source of income;

• exclusions from US gross income;

• the rules for determining and computing US tax liability;

• US tax liability for a dual-status tax year (i.e. where an individual has periods of US residence and US non-residence within the same tax year);

• filing information;

• paying tax through withholding tax or estimated tax;

• benefits under US income tax treaties and social security agreements;

• exemptions for employees of foreign governments and international organisations under US tax treaties and US tax law;

• sailing and departure permits for departing aliens; and

• how to get tax help from the IRS. Publication 519 also includes:

• a table of US tax treaties (updated through 31 December 2012);

• appendix A (Tax Treaty Exemption Procedure for Students), which contains the statements non-resident alien students and trainees must file with IRS Form 8233 (Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Non-resident Alien Individual) to claim a tax treaty exemption from withholding of tax on compensation for dependent personal services; and

• appendix B (Tax Treaty Exemption Procedure for Teachers and Researchers), which contains the statements non-resident alien teachers and researchers must file for the same purpose as appendix A. Revised Publication 519 provides information on relevant tax changes for 2012, including:

• increase in the personal exemption amount to $ 3,800;

• disqualification of interest paid on non-registered (bearer) bonds from treatment as portfolio interest that is eligible for exemption from US withholding tax, effective for obligations issued after 18th March 2012;

• extension of the treatment of a regulated investment company (RIC, or mutual fund) as a qualified investment entity (QIE) under The Foreign Investment in Real Property Tax Act of 1980 [FIRPTA] through 2013 for purposes of taxing RIC distributions that are attributable to gains from the sale of US real property interests;

• extension of the withholding exemption on certain interest-related dividends and shortterm capital gain dividends paid by a mutual fund or other RIC through 2013; and

• increase in the withholding rate on effectively connected income of a partnership that is allocable to non-corporate partners to 39.6%.

Additionally, Publication 519 refers to the other IRS publications that are relevant in this context, including:

• Publication 514 (Foreign Tax Credit for Individuals); Publication 515 (Withholding of Tax on Non-resident Aliens and Foreign Entities);

• Publication 597 (Information on the United States-Canada Income Tax Treaty); and

• Publication 901 (US Tax Treaties). Publication 519 is available on the IRS website.

(iii) Public comments requested on cross-border transfer of stocks and securities

The US IRS and the US Treasury Department have issued a notice requesting comments on final regulations (TD 8770, Certain Transfers of Stock or Securities by US Persons to Foreign Corporations and Related Reporting Requirements) and final regulations (TD 8862, Stock Transfer Rules) issued in connection with cross-border transfers of stock and securities. TD 8770 was issued with regulations on the transfer of stocks and securities in international transactions under section 367(a), (b), and (d) of the US Inter nal Revenue Code (IRC) and IRC section 6038B to address:

• the tax treatment of transfers of stocks and securities to foreign persons in outbound reorganisation transactions;

• the terms and conditions for entering a gain recognition agreement (GRA) with the IRS with regard to such transfers;

• the tax treatment of stock transfers under IRC section 351 dealing with incorporation transactions and IRC section 368(a)(1)(B) dealing with stock-for-stock reorganisations; and

• the rules for complying with the notice and information reporting requirements when property is transferred by a US person to a foreign person.

•    TD 8862 was issued with regulations under IRC section 367(b), which is intended to prevent the avoidance of US tax when stock or assets are transferred outside the US taxing jurisdiction pursuant to corporate transactions that would otherwise qualify for tax-free treatment under the IRC.

TD 8862 provides guidance on:

•    the treatment of US-inbound transactions (i.e. repatriation transactions where assets are transferred from a foreign corporation to a US domestic corporation) and foreign-to-foreign transactions (i.e. where stock or assets are transferred between foreign corporations that have US ownership);

•    the tax consequences for the parties to such transactions, including foreign currency aspects; and

•    the requirement that persons who realised income from such transactions file a notice with the IRS.

(iv)    Public comments requested on bilateral safe harbours for transfer pricing

The US IRS has issued a News Release (IR-2013-30) with the announcement that it is seeking public comments regarding the development of a model memorandum of understanding between competent authorities on certain transfer pricing issues. Specifically, the IRS is requesting comments on bilateral safe harbours with regard to arm’s length compensation for routine distribution functions.

On 6th June 2012, the Organization for Economic Co-Operation and Development (OECD) issued a discussion draft on safe harbours as part of its project to improve the administrative aspects of transfer pricing. The discussion draft is entitled “Discussion Draft – Proposed Revision of the Section on Safe Harbours in Chapter IV of the OECD Transfer Pricing Guidelines and Draft Sample Memoranda of Understanding for Competent Authorities to Establish Bilateral Safe Harbour”.

This discussion draft includes proposed revisions of the section on safe harbours in Chapter IV of the Transfer Pricing Guidelines and related sample memoranda of understanding for competent authorities to establish bilateral safe harbours.

The OECD has released public comments to the discussion draft in the form of a report entitled “The Comments Received with respect to the Draft on the Revision of the Safe Harbour Section of the Transfer Pricing Guidelines”

The IRS notes that such safe harbours could support sound tax administration. The IRS requests comments that are highly specific to the issues at hand, to the point of proposing text for draft model agreements involving routine distribution functions.

(v)    Public comments requested on information return for stock ownership of foreign corporations

The US IRS and the US Treasury Department have issued a notice requesting comments on IRS Form 5471 (Information Return of US Persons With Respect to Certain Foreign Corporations) and related schedules.

IRS Form 5471 and the related schedules are used to satisfy the reporting requirements of sections 6038 and 6046 of the US IRC and the regulations issued thereunder, which require US persons to file reports with the IRS if they have certain ownership interests in a foreign corporation.

IRS Form 5471 is required to be filed by any US person who falls into one of the following categories:

•    any US person that has acquired 10% or more of the stock of a foreign corporation (either combined with stock already owned or without regard to such stock);

•    any US person that has control (i.e. has more than a 50% stock ownership, by voting power or value) of a foreign corporation; and

•    any US person who owns 10% of more of the voting stock of a controlled foreign corporation (CFC) or owns any stock in a CFC that is also a captive insurance company.

The term US person generally includes a US citizen or resident, a domestic corporation, a domestic partnership, or an estate or trust other than a foreign estate or trust.

IRS Form 5471 is also required to be filed by any US citizen or resident who is an officer or director of a foreign corporation in which a US person owns or acquires 10% or more of the stock either by voting power or value.

(vi)    IRS issues updated Publication 515 – With-holding of Tax on Non-resident Aliens and Foreign Entities.

The US IRS has released the 2013 revision of Publication 515 (Withholding of Tax on Non-resident Aliens and Foreign Entities). The publication is dated 4 February 2013 and is intended for use in 2013.

Publication 515 provides guidance for withholding agents who pay income to foreign persons, including non-resident aliens, foreign corporations, foreign partnerships, foreign trusts, foreign estates, foreign governments and international organisations.

The topics discussed in Publication 515 include:

•    the persons responsible for withholding (withholding agents);

•    the types of income subject to withholding;

•    the information return and tax return filing obligations of withholding agents;

•    withholding by a partnership on its income effectively connected with a US trade or business that is allocable to its foreign partners;

•    withholding on transfer or distribution of a US real property interest under FIRPTA; and

•    how to get tax help from the IRS.

Revised Publication 515 also contains the following US tax treaty tables:

•    Table 1 lists the withholding rates under US tax treaties on income other than personal service income for 2013 (i.e. interest, dividends, and royalties).

•    Table 2 lists the different types of personal service income that are entitled to an exemption from, or reduction in, withholding under US tax treaties.

•    Table 3 lists US tax treaties (updated through 31 December 2012) with information on where the full text of each treaty and protocol may be found in the IRS Cumulative Bulletin, which is available on the IRS web site.

Revised Publication 515 includes discussion of the new rules regarding:

•    information reporting for interest paid to non-residents on US deposits on or after 1st January 2013

•    exclusion of interest paid on non-registered (bearer) bonds from portfolio interest, effective for obligations issued after 18th March 2012

•    extension of the treatment of a regulated investment company (RIC, or mutual fund) as a qualified investment entity (QIE) under FIRPTA through 2013 for purposes of taxing RIC distributions that are attributable to gains from the sale of US real property interests

•    extension of the withholding exemption on certain interest-related dividends and short-term capital gain dividends paid by a mutual fund or other RIC through 2013

•    increase in the withholding rate for non-corporate partners to 39.6%); and

•    the FATCA withholding requirement for US withholding agents with regard to certain types of payments made to non-participating foreign financial institutions (NPFFIs) beginning in 2014.

Additionally, Publication 515 refers to the other IRS publications that are relevant in this context, including:

•    IRS Publication 15 (Circular E, Employer’s Tax Guide);

•    Publication 15-A (Employer’s Supplemental Tax Guide);

•    Publication 15-B (Employer’s Tax Guide to Fringe Benefits);

•    Publication 51 (Circular A, Agricultural Employer’s Tax Guide);

•    Publication 519 (US Tax Guide for Aliens); and

•    Publication 901 (US Tax Treaties).

Publication 515 is available on the IRS web site at www.irs.gov.

(vii)    IRS issues updated Publication 514 – Foreign Tax Credit for Individuals.

The US IRS has released the 2013 revision of Publication 514 (Foreign Tax Credit for Individuals). The publication is dated 29th January 2013 and is intended for use in preparing 2012 tax returns.

Publication 514 explains the provisions of US federal income tax law that apply to US citizens and resident aliens who paid or accrued taxes to a foreign country on foreign source income and intend to take a US credit or itemised deduction for such taxes. Publication 514 discusses:

•    claiming a credit or deduction for foreign income taxes;

•    benefits of claiming the foreign tax credit (FTC);

•    persons eligible for the FTC;

•    taxes eligible (or not eligible) for the FTC;

•    computation of the FTC, including application of the US basket system;

•    carry-back and carry-over of the FTC;

•    procedures for claiming the FTC; and

•    information on how to obtain tax help from the IRS.

Revised Publication 514 includes information on:

•    new rules for determining who is considered to pay a foreign income tax when the tax is imposed on the combined income of multiple persons; and

•    inclusion of Iraq in the list of countries that participate in international boycotts, with the result that taxpayers may be denied a US FTC for taxes paid to Iraq in addition to taxes paid to the other countries on the list.

Publication 514 also refers to the other IRS publications that are relevant in this context, including IRS Publication 54 (Tax Guide for US Citizens and Resident Aliens Abroad), Publication 519 (US Tax Guide for Aliens), and Publication 570 (Tax Guide for Individuals With Income From US Possessions).

Additionally, Publication 514 provides two examples with filled- in IRS Form 1116, Foreign Tax Credit (Individual, Estate, or Trust). To claim an FTC, it is generally required to file a Form 1116 with the income tax return. A separate Form 1116 is required for taxes paid on certain designated categories of income, including separate basket income, for which a foreign tax credit is claimed.

Publication 514 is available on the IRS web site at www.irs.gov.

(viii)    Proposed regulations issued on gain recognition in cross-border corporate transactions

The US Treasury Department and the IRS have issued proposed regulations (REG-140649-11) regarding gain recognition in cross-border corporate transactions. The regulations propose amendments to the existing rules on failures to file gain recognition agreements (GRAs) and related documents, or to satisfy other reporting obligations, in connection with certain transfers of property to foreign corporations in non-recognition transactions.

Section 367(a) of the US IRC imposes tax on US outbound reorganisations and other corporate transactions that would otherwise qualify for tax-free treatment if undertaken in a domestic context. Section 367(a) permits exceptions in certain cases, however, including the outbound transfer of stock or securities of foreign corporations in cross-border corporate transactions (i.e. incorporations, liquidations, mergers, acquisitions, and other reorganizations). These exceptions generally require the US transferor, among other things, to file a GRA and other related documents under Treasury Regulation section 1.367(a)-8 (the IRC section 367(a) GRA regulations).

IRS section 367(e)(2) further provides exceptions with regard to recognition of gain on a liquidation of an 80%-owned subsidiary into a foreign parent in a transaction described in IRC section 332 (i.e. an US outbound liquidation in the case of a liquidation of a US subsidiary, or a foreign-to-foreign liquidation in the case of a liquidation of a foreign subsidiary).

In addition, under IRC section 6038B and the related regulations, a US transferor of property to a foreign corporation in a non-recognition transaction covered by IRC section 367(a) is required to file IRS Form 926 (Return by a US Transferor of Property to a Foreign Corporation), describing the transferee foreign corporation and the property transferred.

Under the current regulations, a US transferor is subject to full gain recognition under IRC section 367(a)(1) if the US transferor fails to timely file an initial GRA, or to comply in any material respect with the IRC section 367(a) GRA regulations or with the terms of an existing GRA. Relief may be granted if the US transferor demonstrates that its failure was due to reasonable cause and not wilful neglect.

The proposed regulations remove the reasonable cause requirement, and accordingly gain recognition will apply only if the taxpayer’s failure is wilful. The proposed regulations provide guidance on the interpretation of a wilful failure, which will generally be based on the facts and circumstances in each case, and include illustrative examples.

The proposed regulations also eliminate the current requirement that the IRS must respond within 120 days to requests received from taxpayers seeking relief from gain recognition due to non-compliance under IRC section 367. The IRS will no longer be subject to a strict processing time for taxpayer requests in this regard.

The current reasonable cause standard, however, will continue to apply to a US transferor seeking relief from penalty for failure to satisfy the IRC section 6038B reporting requirement. Therefore, a US taxpayer seeking relief from IRC section 6038B penalty will still need to demonstrate that its failure was due to reasonable cause and not wilful neglect.

In addition, the proposed regulations provide rules similar to the rules under the IRC section 367(a) GRA regulations and related IRC section 6038B regulations for failures to file the required documents or statements and failures to comply under the IRC section 367(e)(2) regulations and related section 6038B regulations with respect to liquidation transactions.

The proposed regulations also modify the information that must be reported to the IRS with respect to liquidating distributions under the IRC section 367(e)(2) regulations, including the addition of a requirement to report the basis and fair market value of the property distributed.

The current Treasury Regulation section 1.367(a)–3 also require certain other statements to be filed in connection with certain transfers of stock or securities, but do not provide rules of application for taxpayers who fail to meet these requirements. The proposed regulations incorporate rules in this regard that are similar to the rules that apply with respect to failures to file or failures to comply with the IRC section 367(a) GRA regulations. The proposed regulations are designated Treasury Regulation sections 1.367(a)-3 and -8, 1.367(e)-2, and 1.6038B-1.

The proposed regulations will apply to documents or statements that are required to be filed with a timely filed return on or after the date on which the regulations are published as final, as well as to requests for relief that are submitted on or after the date on which the regulations are published as final.

(ix)    Public comments requested on allocation of interest expenses by foreign corporations engaged in US business

The US IRS and the US Treasury Department have issued a notice requesting comments on final regulations (TD 9465, Determination of Interest Expense Deduction of Foreign Corporations).

The final regulations were issued u/s. 882(c) of the US IRC to provide guidance on the determination of the interest expense deduction for foreign corporations engaged in a trade or business within the United States.

The final regulations adopted, without substantive change, the temporary regulations (TD 9281) issued on this topic. The temporary regulations, among other things, also implemented the views of the US Treasury Department and IRS that were expressed in IRS Notice 2005-53 regarding the operation of the three-step formula used to allocate interest expenses to the United States (see United States-1, News 21st July 2005).

The final regulations made substantial modifications to the three-step formula in Treasury regulation section 1.882-5. In particular, the final regulations increased the fixed-ratio that may be used by foreign banks to compute US-connected liabilities in Step 2 from 93% to 95%.

The final regulations also provided guidance for coordinating the interest allocation rules of Treasury regulation section 1.882-5 with US income tax treaties that, pursuant to the authorised OECD approach (AOA), apply the OECD Transfer Pricing Guidelines, by analogy, in determining the profits of a permanent establishment. The final regulations recognised that an income tax treaty or accompanying documents might provide alternative rules for allocating interest expense to a permanent establishment.

(x)    Final regulations issued on requirements under FATCA

The US Treasury Department and the IRS issued final regulations (TD 9610) on 17th January 2013 to provide guidance on account identification, information reporting, and withholding requirements that the Foreign Account Tax Compliance Act (FATCA) imposes on foreign financial institutions (FFIs), other foreign entities, and US withholding agents.

The final regulations adopt with modifications the proposed regulations (REG-121647-10) issued on 15 February 2012 , and the amendments described in IRS Announcement 2012-42 issued on 24th October 2012. The final regulations are effective 28th January 2013.

The issuance of the final regulations was announced in a Press Release issued by the Treasury Department on 17th January 2013. The Press Release states that the final regulations implement FATCA in the following manners:

•    The final regulations coordinate the obligations for FFIs under the regulations and the intergovernmental agreements in order to reduce administrative burdens for FFIs that operate in multiple jurisdictions.

•    The final regulations phase in over an extended transition period to provide sufficient time for FFIs to develop necessary systems.

•    The final regulations align the regulatory timelines with the timelines described in the intergovernmental agreements to avoid confusion and unnecessary duplicative procedures.

•    The final regulations provide relief from with-holding with respect to certain grandfathered obligations and certain payments made by non-financial entities.

•    The final regulations expand and clarify the treatment of certain categories of low-risk institutions, such as governmental entities and retirement funds.

•    The final regulations permit certain investment entities to be reported by the FFIs with which they hold accounts rather than being required to register as FFIs and report to the IRS.

•    The final regulations clarify the types of passive investment entities that must be identified and reported by FFIs.

•    The final regulations provide more stream-lined registration (which will take place through an online system) and compliance procedures for groups of financial institutions, including commonly managed investment funds.

•    The final regulations provide additional detail regarding FFIs’ obligations to verify their compliance under FATCA.

FATCA was enacted in 2010 as Sections 1471 to 1474 of the US IRC to combat non-compliance by US taxpayers using foreign accounts. FATCA requires FFIs to report to the IRS information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest.

FFIs that do not register and enter into an agreement with the IRS will be subject to withholding on certain types of payments relating to US investments

(xi)    Final regulations issued to prevent tax-avoidance in stock acquisitions by related corporations

The US Treasury Department and the IRS have issued final regulations (TD 9606) to prevent tax-avoidance in connection with stock acquisitions by related corporations under section 304 of the US IRC.

IRC section 304 is intended to prevent the use of stock sales between brother-sister or parent-subsidiary corporations as a means to produce capital gains rather than dividend treatment.

Specifically, IRC section 304(a)(1) provides that, if a corporation (acquiring corporation), in return for property, acquires stock in another corporation (issuing corporation) from a transferor in control of each of the two corporations, property received by the transferor is treated as a distribution in redemption of the stock of the acquiring corporation.

The redemption is then analysed under the tests described in IRC section 302(b), which are intended to distinguish a true stock redemption (treated as a sale) from a distribution of corporate earnings. If none of the tests are met, the transaction is treated as a corporate distribution with possible dividend consequences, rather than as a sales transaction.

In determining the amount of the corporate distribution that is a dividend, the earnings and profits (E&P) of both the acquiring corporation and the issuing corporation are taken into account under IRC section 304(b)(2). IRC section 304(b)(5) limits the amount of E&P of a foreign acquiring corporation that are taken into account for this purpose. Under IRC section 301(c)(2) and (3), if the amount of the distribution exceeds the combined E&P of the acquiring corporation and the issuing corporation, the excess reduces the transferor’s basis in the stock and is treated as a tax-free return of capital to that extent and as gain from a sale of the stock to the extent of any further excess.

It was observed that some taxpayers attempted to artificially eliminate the amount of a distribution constituting a taxable dividend by, for example, having an existing corporation with a positive E&P account form a new corporation with no E&P and having the newly formed corporation (“acquiring corporation”) acquire the stock of an issuing corporation using the capital contributed by the existing corporation (“deemed acquiring corporation”) to form the acquiring corporation.

On 14th June 1988, the Treasury Department and the IRS promulgated Treasury regulation section 1.304-4T (TD 8209) to treat the deemed acquiring corporation as having acquired the stock of the issuing corporation if the deemed acquiring corporation controls the acquiring corporation and the acquiring corporation was created, organised, or funded primarily to avoid the application of IRC section 304 to the deemed acquiring corporation.
    
On 30th December 2009, temporary regulations (TD 9477) and proposed regulations (REG–132232–08) were issued to extend the application of the anti-abuse rule of Treasury regulation section 1.304-4T to a “deemed issuing corporation”. A deemed issuing corporation refers to a corporation that is controlled by an issuing corporation if the issuing corporation is a newly formed corporation having no E&P and the issuing corporation acquired the stock of the deemed issuing corporation in connection with the acquisition of the stock of the issuing corporation by an acquiring corporation with a principal purpose of avoiding the application of IRC section 304 to the deemed issuing corporation. The acquiring corporation then will be treated as acquiring the stock of the deemed issuing corporation subject to the regular IRC section 304 analysis described above.

The final regulations adopt the 2009 temporary regulations without change. The final regulations are designated Treasury regulation section 1.304-4.

The final regulations are effective on 26th December 2012 and apply to acquisitions of stock occurring on or after 29th December 2009.

(xii)    Treaty between US and Norway – IRS releases competent authority agreement regarding source of income

The US IRS has released the official text of the recent competent authority agreement between the United States and Norway.

The agreement clarifies the meaning of the phrases “remuneration described in article 17 (Governmental Functions)” and “payments described in article 19 (Social Security Payments)” as used in the last sentence of article 24(6) (Source of Income) of the 1971 US-Norway Income Tax Treaty.

The first sentence of article 24(6) provides a general source rule for compensation received by an individual for his personal services, under which such compensation is treated as income from sources within a contracting state only if the services are performed in that state.

The last sentence of article 24(6) provides an exception to the general source rule with regard to remuneration described in article 17 and payments described in article 19. Such remuneration is treated as income from sources within a contracting state only if paid by, or from the public funds of, that state.

According to the competent authority agreement, the following understandings have been reached for the purposes of article 24(6):

•    remuneration described in article 17 is limited to income paid by, or from public funds of, one of the contracting states to a citizen of that contracting state, and thus, for example, remuneration that is paid by Norway to a person who is not a citizen of Norway would be subject to the general source rule instead of the exception;

•    payments described in article 19 refers to Social Security payments and other public pensions paid by a contracting state to a resident of the other contracting state or to a US citizen, without regard to the location in which the underlying services are performed;

•    remuneration that is not described in article 17 is subject to the provisions of the applicable article; and

•    the saving clause of article 22(3) (General Rules of Taxation) applies if remuneration described in article 17 is paid by Norway to a citizen of Norway who is also either a US citizen or a US lawful permanent resident (i.e. a green card holder), and the entire amount of the payment will be treated as income from sources without the United States for the purpose of applying article 22(3) (Relief from Double Taxation).

The competent authority agreement was entered into under article 27(2) (Mutual Agreement Procedure) of the Treaty.

[Acknowledgment: We have compiled the above information from the Tax News Service of the IBFD for the period 18-12-2012 to 18-03-2013.]