Common use of Source of Income Clause in Contracts

Source of Income. For purposes of this Convention: (1) Dividends shall be treated as income from sources within a Contracting State only if- (a) Paid by a corporation of that Contracting State, or (b) Paid by a corporation of any State if, for the 3-year period ending with the close of such corporation's taxable year preceding the declaration of the dividends (or for such part of that period as such corporation has been in existence), at least 50 percent of such corporation's gross income from all sources was business profits attributable to a permanent establishment which such corporation had in that Contracting State; but only in an amount which bears the same ratio to such dividends as the amount of the business profits attributable to that permanent establishment bears to the corporation's gross income from all sources. If a dividend would be treated under this paragraph as income from sources within both Contracting States, it shall be deemed to be income from sources only within the Contracting State described in subparagraph (b), to the extent provided therein. (2) Interest shall be treated as income from sources within a Contracting State only if paid by such Contracting State, a political subdivision or local authority thereof, or by a resident of that Contracting State. Notwithstanding the preceding sentence, if such interest is paid on an indebtedness incurred in connection with a permanent establishment which bears such interest, then such interest shall be deemed to be from sources within the State (whether or not a Contracting State) in which the permanent establishment is situated. (3) Royalties for the use of, or the right to use, property or rights shall be treated as income from sources within a Contracting State only to the extent that such royalties are for the use of, or the right to use, such property or rights within that Contracting State. Notwithstanding the preceding sentence, if such royalty is paid with respect to a liability to pay the royalty that was incurred in connection with a permanent establishment which bears such royalty, then such royalty shall be deemed to be from sources within the State (whether or not a Contracting State) in which the permanent establishment is situated. (4) Income from real property (including royalties) described in Article 7 (Income from Real Property) shall be treated as income from sources within a Contracting State only if such property is situated in that Contracting State. (5) Income received by an individual for his performance of labor or personal services, whether as an employee or in an independent capacity, shall be treated as income from sources within a Contracting State only to the extent that such services are performed in that Contracting State. However, income from personal services performed aboard ships or aircraft operated by a resident of one of the Contracting States in international traffic shall be treated as income from sources within that Contracting State if rendered by a member of the regular complement of the ship or aircraft. Notwithstanding the preceding provisions of this paragraph, remuneration described in Article 20 (Governmental Functions) and payments described in Article 19 (Social Security Payments) paid from the public funds of a Contracting State or a political subdivision or local authority thereof shall be treated as income from sources within that Contracting State only. (6) Notwithstanding paragraphs (1) through (4), business profits which are attributable to a permanent establishment which the recipient, a resident of one of the Contracting States, has in the other Contracting State shall be treated as income from sources within that other Contracting State. (7) Gross revenues from the operation of ships in international traffic shall be treated as from sources within a Contracting State to the extent they are derived from outgoing traffic originating in that State. (8) The source of any item of income to which paragraphs (1) through (7) are not applicable shall be determined by each of the Contracting States in accordance with its own law. Notwithstanding the preceding sentence, if the source of any item of income under the laws of one Contracting State is different from the source of such item of income under the laws of the other Contracting State or if the source of such income is not readily determinable under the laws of one of the Contracting States, the competent authorities of the Contracting States may, in order to prevent double taxation or further any other purpose of this Convention, establish a common source of the item of income for purposes of this Convention.

Source of Income. For purposes of this Convention: (1) . Dividends shall be treated as income from sources within a Contracting State only if- (a) Paid if paid by a corporation of that Contracting State. Notwithstanding the preceding sentence, or if the dividends are described in paragraph 4(b) of Article 12 (b) Paid Dividends), or are dividends paid by a corporation (other than a resident of any State if, for the 3-year period ending with the close a Contracting State) which derives 50 percent or more of such corporation's taxable year preceding the declaration of the dividends (its total gross income from one or for such part of that period as more permanent establishments which such corporation has been in existence), at least 50 percent of such corporation's gross income from all sources was business profits attributable to a permanent establishment which such corporation had in that Contracting State; but only in an amount which bears the same ratio to such dividends as the amount of the business profits attributable to that permanent establishment bears to the corporation's gross income from all sources. If a dividend would be treated under this paragraph as income from sources within both Contracting United States, it they shall be deemed to be income from sources only within the Contracting State described in subparagraph (b), to the extent provided thereinUnited States. (2) . Interest shall be treated as income from sources within a Contracting State only if paid by such Contracting State, a political subdivision or a local authority thereof, or by a resident of that Contracting State. Notwithstanding the preceding sentence, if and except for interest described in paragraph 7(c) of Article 13 (Interest) which shall be deemed to be from sources within the United States: a. If the person paying the interest (whether or not such person is a resident of a Contracting State) has a permanent establishment in a Contracting State in connection with which the indebtedness on which the interest is paid was incurred, and such interest is paid on an indebtedness incurred borne by such permanent establishment; or b. If the person paying the interest is a resident of a Contracting State and has a permanent establishment in a State (other than a Contracting State) in connection with a which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment which bears such interest, then such Such interest shall be deemed to be from sources within the State (whether or not a Contracting State) in which the permanent establishment is situated. 3. Royalties described in paragraph (32) Royalties of Article 14 (Royalties) for the use of, or the right to use, use property or rights described in such paragraph shall be treated as income from sources within a Contracting State only to the extent that such royalties are for the use of, or the right to use, such property or rights within that Contracting State. Notwithstanding the preceding sentence, if such royalty is paid with respect to a liability to pay the royalty that was incurred in connection with a permanent establishment which bears such royalty, then such royalty shall be deemed to be from sources within the State (whether or not a Contracting State) in which the permanent establishment is situated. (4) . Income from real property (including royalties) ), described in Article 7 15 (Income from Real Property) ), shall be treated as income from sources within a Contracting State only if such property is situated in that Contracting State. 5. Income from the rental of tangible personal (5movable) property shall be treated as income from sources within a Contracting State only if such property is used in that Contracting State. 6. Income received by an individual for his performance of labor or personal services, whether as an employee or in an independent capacity, shall be treated as income from sources within a Contracting State only to the extent that such services are performed in that Contracting State. HoweverNotwithstanding the preceding sentence, income from personal services performed aboard ships or aircraft operated by a resident of one of the a Contracting States State in international traffic shall be treated as income from sources only within that Contracting State if rendered by a member of the regular complement of the ship or aircraft. For the purposes of this paragraph, income from labor or personal services includes pensions (as defined in paragraph (3) of Article 23 (Private Pensions and Annuities)) paid in respect of such services. Notwithstanding the preceding provisions of this paragraph, remuneration : a. Remuneration described in Article 20 22 (Governmental Functionsfunctions) and payments described in Article 19 24 (Social Security Payments) shall be treated as income from sources within a Contracting State only if paid by or from the public funds of a that Contracting State or a political subdivision or local authority thereof thereof; and b. The portion of directors' fees taxable in a Contracting State under Article 20 (Directors' Fees) shall be treated as income from sources within such Contracting State. 7. Income from the purchase and sale of intangible or tangible personal (including movable) property (other than gains defined as royalties by paragraph (2) (b) of Article 14 (Royalties)) shall be treated as income from sources within a Contracting State only if such property is either sold in that Contracting State onlyor is property described in paragraph (1) (a) or (b) of Article 16 (Gains) and the real property is located or deemed to be located in that Contracting State. (6) 8. Notwithstanding paragraphs (1) through (47), business industrial or commercial profits which are attributable to a permanent establishment which the recipient, a resident of one of the a Contracting StatesState, has in the other Contracting State State, including income derived from real property and natural resources and dividends, interest, royalties (as defined in paragraph (2) of Article 14 (Royalties)), and gains, but only if the property or rights giving rise to such income, dividends, interest, royalties, or gains are effectively connected with such permanent establishment, shall be treated as income from sources within that other Contracting State. (7) Gross revenues from the operation of ships in international traffic shall be treated as from sources within a Contracting State to the extent they are derived from outgoing traffic originating in that State. (8) 9. The source of any item of income to which paragraphs (1) through (7) 8) are not applicable shall be determined by each of the Contracting States in accordance with its own law. Notwithstanding the preceding sentence, if the source of any item of income under the laws of one Contracting State is different from the source of such item of income under the laws of the other Contracting State or if the source of such income is not readily determinable under the laws of one of the a Contracting StatesState, the competent authorities of the Contracting States may, in order to prevent double taxation or further any other purpose of this Convention, establish a common source of the item of income for the purposes of this Convention.

Source of Income. For purposes This Article provides rules for determining the source of items of income covered by the Convention. It is important in implementing the general rule set forth in paragraph 1 of Article 28 (General Rules of Taxation) that a contracting State may tax a resident of the other State only on income derived from Sources in the first-mentioned State. Paragraph 1 of Article 23 (Relief from Double Taxation) allows the United States to apply the source rules of the Internal Revenue Code, rather than the source rules of this Convention: (1) Dividends shall be treated as Article, solely for the purpose of limiting the foreign tax credit to income from sources within without the United States. Dividends paid by a resident of a Contracting State only if- (a) Paid have their source in that State. Interest paid by a corporation resident of that a Contracting State, or (b) Paid or by a corporation of any that State if, for the 3-year period ending with the close of such corporation's taxable year preceding the declaration of the dividends (or for such part of that period as such corporation has been in existence), at least 50 percent of such corporation's gross income from all sources was business profits attributable to a permanent establishment which such corporation had in that Contracting State; but only in an amount which bears the same ratio to such dividends as the amount of the business profits attributable to that permanent establishment bears to the corporation's gross income from all sources. If a dividend would be treated under this paragraph as income from sources within both Contracting States, it shall be deemed to be income from sources only within the Contracting State described in subparagraph (b), to the extent provided therein. (2) Interest shall be treated as income from sources within a Contracting State only if paid by such Contracting State, a political subdivision or local authority thereof, or by a resident of generally has its source in that Contracting State. Notwithstanding the preceding sentenceHowever, if such the person paying the interest is paid on an indebtedness incurred in connection with has a permanent establishment which in one of the Contracting States and the permanent establishment bears such interestthe interest payment, then such the interest shall be deemed to be from sources within the State (whether or not a Contracting State) in which has its source where the permanent establishment is situated. (3) Royalties for the use of, or the right to use, property or rights shall be treated as income from sources within a Contracting State only to the extent that such royalties are for the use of, or the right to use, such property or rights within that Contracting State. Notwithstanding the preceding sentence, if such royalty is paid with respect to a liability to pay the royalty that was incurred in connection with a permanent establishment which bears such royalty, then such royalty shall be deemed to be from sources within the State (This rule applies whether or not a Contracting State) in which the permanent establishment person paying the interest is situated. (4) Income from real property (including royalties) described in Article 7 (Income from Real Property) shall be treated as income from sources within a Contracting State only if such property is situated in that Contracting State. (5) Income received by an individual for his performance of labor or personal services, whether as an employee or in an independent capacity, shall be treated as income from sources within a Contracting State only to the extent that such services are performed in that Contracting State. However, income from personal services performed aboard ships or aircraft operated by a resident of one of the Contracting States States; it would apply, for example, to interest paid by a bank incorporated in a third country which is borne by a branch of that bank in Indonesia or the United States. For this purpose, interest is "borne" by a permanent establishment if it is deductible by the permanent establishment. Royalties, as defined in Article 13 (Royalties), have their source in the State where the right or property giving rise to the royalty is used. Income from immovable property has its source where the property is situated. Income from the rental of tangible personal property (movable property) also has its source where the property is situated, except in the case of ships, aircraft or containers used in international traffic shall be treated traffic. Income from the rental of such Ships, aircraft or containers is either taxable only in the State of residence under Article 9 (Shipping and Air Transport) or is defined as income from sources within that Contracting a royalty under Article 13 (Royalties) and sourced accordingly. Income derived by an individual for personal services has its source where the services are performed. An exception applies to remuneration for services performed by the crew of a ship or aircraft used in international traffic, which has its source in the State if rendered by a member of residence of the regular complement operator of the ship or aircraft. Notwithstanding Pensions and similar remuneration from private Sector employers paid with respect to past services are sourced where the preceding provisions of this paragraph, remuneration described in services were performed. This rule does not apply to payments covered by Article 20 (Governmental Functions) and payments described in Article 19 22 (Social Security Payments) ), which are sourced in a Contracting State if paid from the out of public funds of a Contracting that State or a political subdivision or local authority thereof shall thereof. (The source rule says "only" if paid out of public funds; but since Article 22 defines such payments as made from public funds, this will always be the case.) Income from the disposition of a U.S. real property interest or of an interest in real property situated in Indonesia is treated as income from sources within that Contracting State only. (6) in the United States or Indonesia, respectively. Notwithstanding paragraphs (1) through (4)the above rules, business profits income which are is attributable to a permanent establishment which the recipient, in a resident of one of the Contracting States, has in the other Contracting State shall be is treated as income from sources within that other Contracting State. (7) Gross revenues from the operation of ships in international traffic shall be treated as from sources within a Contracting State to the extent they are derived from outgoing traffic originating in that State. (8) , provided that the property or right giving rise to the income is effectively connected with that permanent establishment. The source of any item of income to which paragraphs (1) through (7) are not applicable shall be specified in this Article is determined by each of the Contracting States in accordance with its own law. Notwithstanding the preceding sentence, if the source of any item of income under the laws of one Contracting State is different from the source of such item of income under the domestic laws of the other Contracting State or if respective States. If the source of such income is not readily determinable result under the domestic laws of one of the Contracting Statesis unclear or differs, the competent authorities of the Contracting States may, in order to prevent double taxation or further any other purpose of this Convention, may establish a common source rule for purposes of the item Convention. This approach differs from the position of the U.S. Model, which establishes taxing rules for specified types of income and reserves to the State of residence the taxation of income for purposes which a specific taxing rule is not provided. However, some conventions, especially with developing countries, allow taxation of such residual income in the State of source as well. (See, for example the U.S. Income Tax Conventions with Barbados and Jamaica. The proposed treaty with India also contains such a provision.) In such a case, the result is essentially the same as under this ConventionArticle.

Source of Income. For purposes of this Convention: (1) . Dividends shall be treated as income from sources within a Contracting State only if- (a) Paid if paid by a corporation of that Contracting State, or (b) Paid by a corporation of any State if, for the 3-year period ending with the close of such corporation's taxable year preceding the declaration of the dividends (or for such part of that period as such corporation has been in existence), at least 50 percent of such corporation's gross income from all sources was business profits attributable to a permanent establishment which such corporation had in that Contracting State; but only in an amount which bears the same ratio to such dividends as the amount of the business profits attributable to that permanent establishment bears to the corporation's gross income from all sources. If a dividend would be treated under this paragraph as income from sources within both Contracting States, it shall be deemed to be income from sources only within the Contracting State described in subparagraph (b), to the extent provided therein. (2) . Interest shall be treated as income from sources within a Contracting State only if paid by such Contracting State, a political subdivision sub-division or a local authority thereof, or by a resident of that Contracting State. Notwithstanding the preceding sentence, if such interest is paid on an indebtedness incurred in connection with a permanent establishment which bears such interest, then such interest shall be deemed to be from sources within the State (whether or not a Contracting State) in which the permanent establishment is situated. 3. Royalties described in paragraph (32) Royalties of Article 14 (Royalties) for the use of, or the right to use, property or rights described in such paragraph shall be treated as income from sources within a Contracting State only to the extent that such royalties are for the use of, or the right to use, such property or rights within that Contracting State. Notwithstanding the preceding sentence, if such royalty is paid with respect to a liability to pay the royalty that was incurred in connection with a permanent establishment which bears such royalty, then such royalty shall be deemed to be from sources within the State (whether or not a Contracting State) in which the permanent establishment is situated. (4) . Income from real property and gains (including royalties) described in to which Article 7 (Income from Real Property) applies shall be treated as income from sources within a Contracting State only if the real property (or, in the case of property referred to in paragraph (3) of such Article 7, the underlying real property) is situated in that Contracting State. 5. Income from the rental of tangible personal (movable) property shall be treated as income from sources within a Contracting State only to the extent that such income is for the use of such property in that Contracting State. 6. Income from the purchase and sale, exchange, or other disposition of intangible or tangible personal property (other than gains described in paragraph (2) of Article 14 (Royalties)) shall be treated as income from sources within a Contracting State only if such property sale, exchange, or other disposition is situated in within that Contracting State. Notwithstanding the preceding sentence, gains from the sale, exchange, or other disposition of stock to which paragraph (1) (e) of Article 15 (Capital Gains) applies shall be treated as income from sources within Israel. (5) Income 7. Xxxxxx received by an individual for his performance of labor or personal services, whether as an employee or in an independent capacity, shall be treated as income from sources within a Contracting State only to the extent that such services are performed in that Contracting State. However, income Income from personal services performed aboard ships or aircraft operated by a resident of one of the Contracting States in international traffic shall be treated as income from sources within that Contracting State if rendered by a member of the regular complement of the ship or aircraft. Notwithstanding the preceding provisions of this paragraph, remuneration described in Article 20 22 (Governmental Functions) and payments described in Article 19 21 (Social Security Payments) paid from the public funds of a Contracting State or a political subdivision or local authority thereof shall be treated as income from sources within that Contracting State only. (6) 8. Notwithstanding paragraphs (1) through (46), business industrial or commercial profits which are attributable to a permanent establishment which the recipient, a resident of one of the Contracting States, has in the other Contracting State State, shall be treated as income from sources within that other Contracting State. . Industrial or commercial profits attributable to such permanent establishment include any item of income described in paragraphs (71) Gross revenues from the operation of ships in international traffic shall be treated as from sources within a Contracting State through (6) to the extent they are derived from outgoing traffic originating provided in that Stateparagraph (6) of Article 8 (Business Profits). (8) 9. The source of any item of income to which paragraphs (1) through (7) 8) are not applicable shall be determined by each of the Contracting States in accordance with its own law. Notwithstanding the preceding sentence, if the source of any item of income under the laws of one Contracting State is different from the source of such item of income under the laws of the other Contracting State or if the source of such income is not readily determinable under the laws of one of the Contracting States, the competent authorities of the Contracting States may, in order to prevent double taxation or further any other purpose of this Convention, establish a common source of the item of income for purposes of this Convention.,

Source of Income. For purposes of this Convention: (1) . Dividends shall be treated as income from sources within a Contracting State only if- (a) Paid if paid by a corporation of that Contracting State, or (b) Paid by a corporation of any State if, for the 3-year period ending with the close of such corporation's taxable year preceding the declaration of the dividends (or for such part of that period as such corporation has been in existence), at least 50 percent of such corporation's gross income from all sources was business profits attributable to a permanent establishment which such corporation had in that Contracting State; but only in an amount which bears the same ratio to such dividends as the amount of the business profits attributable to that permanent establishment bears to the corporation's gross income from all sources. If a dividend would be treated under this paragraph as income from sources within both Contracting States, it shall be deemed to be income from sources only within the Contracting State described in subparagraph (b), to the extent provided therein. (2) . Interest shall be treated as income from sources within a Contracting State only if paid by such Contracting State, a political subdivision sub-division or a local authority thereof, or by a resident of that Contracting State. Notwithstanding the preceding sentence, if such interest is paid on an indebtedness incurred in connection with a permanent establishment which bears such interest, then such interest shall be deemed to be from sources within the State (whether or not a Contracting State) in which the permanent establishment is situated. 3. Royalties described in paragraph (32) Royalties of Article 14 (Royalties) for the use of, or the right to use, property or rights described in such paragraph shall be treated as income from sources within a Contracting State only to the extent that such royalties are for the use of, or the right to use, such property or rights within that Contracting State. Notwithstanding the preceding sentence, if such royalty is paid with respect to a liability to pay the royalty that was incurred in connection with a permanent establishment which bears such royalty, then such royalty shall be deemed to be from sources within the State (whether or not a Contracting State) in which the permanent establishment is situated. (4) . Income from real property and gains (including royalties) described in to which Article 7 (Income from Real Property) applies shall be treated as income from sources within a Contracting State only if the real property (or, in the case of property referred to in paragraph (3) of such Article 7, the underlying real property) is situated in that Contracting State. 5. Income from the rental of tangible personal (movable) property shall be treated as income from sources within a Contracting State only to the extent that such income is for the use of such property in that Contracting State. 6. Income from the purchase and sale, exchange, or other disposition of intangible or tangible personal property (other than gains described in paragraph (2) of Article 14 (Royalties)) shall be treated as income from sources within a Contracting State only if such property sale, exchange, or other disposition is situated in within that Contracting State. Notwithstanding the preceding sentence, gains from the sale, exchange, or other disposition of stock to which paragraph (1) (e) of Article 15 (Capital Gains) applies shall be treated as income from sources within Israel. (5) 7. Income received by an individual for his performance of labor or personal services, whether as an employee or in an independent capacity, shall be treated as income from sources within a Contracting State only to the extent that such services are performed in that Contracting State. However, income Income from personal services performed aboard ships or aircraft operated by a resident of one of the Contracting States in international traffic shall be treated as income from sources within that Contracting State if rendered by a member of the regular complement of the ship or aircraft. Notwithstanding the preceding provisions of this paragraph, remuneration described in Article 20 22 (Governmental Functions) and payments described in Article 19 21 (Social Security Payments) paid from the public funds of a Contracting State or a political subdivision or local authority thereof shall be treated as income from sources within that Contracting State only. (6) 8. Notwithstanding paragraphs (1) through (46), business industrial or commercial profits which are attributable to a permanent establishment which the recipient, a resident of one of the Contracting States, has in the other Contracting State State, shall be treated as income from sources within that other Contracting State. . Industrial or commercial profits attributable to such permanent establishment include any item of income described in paragraphs (71) Gross revenues from the operation of ships in international traffic shall be treated as from sources within a Contracting State through (6) to the extent they are derived from outgoing traffic originating provided in that Stateparagraph (6) of Article 8 (Business Profits). (8) 9. The source of any item of income to which paragraphs (1) through (7) 8) are not applicable shall be determined by each of the Contracting States in accordance with its own law. Notwithstanding the preceding sentence, if the source of any item of income under the laws of one Contracting State is different from the source of such item of income under the laws of the other Contracting State or if the source of such income is not readily determinable under the laws of one of the Contracting States, the competent authorities of the Contracting States may, in order to prevent double taxation or further any other purpose of this Convention, establish a common source of the item of income for purposes of this Convention.,

Source of Income. For purposes of this Convention: (1) . Dividends shall be treated as income from sources within a Contracting State only if-if - (a) Paid by a corporation of that Contracting State, or (b) Paid by a corporation of any State if, for the 3-year period ending with the close of such corporation's ’s taxable year preceding the declaration of the dividends (or for such part of that period as such corporation has been in existence), at least 50 percent of such corporation's ’s gross income from all sources was business profits attributable to a permanent establishment which such corporation had in that Contracting State; but only in an amount which bears the same ratio to such dividends as the amount of the business profits attributable to that permanent establishment bears to the corporation's ’s gross income from all sources. If a dividend would be treated under this paragraph as income from sources within both Contracting States, it shall be deemed to be income from sources only within the Contracting State described in subparagraph (b), to the extent provided therein. (2) . Interest shall be treated as income from sources within a Contracting State only if paid by such Contracting State, a political subdivision or local authority thereof, or by a resident of that Contracting State. Notwithstanding the preceding sentence, if such interest is paid on an indebtedness incurred in connection with a permanent establishment which bears such interest, then such interest shall be deemed to be from sources within the State (whether or not a Contracting State) in which the permanent establishment is situated. (3) . Royalties for the use of, or the right to use, property or rights shall be treated as income from sources within a Contracting State only to the extent that such royalties are for the use of, or the right to use, such property or rights within that Contracting State. Notwithstanding the preceding sentence, if such royalty is paid with respect to a liability to pay the royalty that was incurred in connection with a permanent establishment which bears such royalty, then such royalty shall be deemed to be from sources within the State (whether or not a Contracting State) in which the permanent establishment is situated. (4) . Income from real property (including royalties) described in Article 7 (Income from Real Property) shall be treated as income from sources within a Contracting State only if such property is situated in that Contracting State. (5) Income . Xxxxxx received by an individual for his performance of labor or personal services, whether as an employee or in an independent capacity, shall be treated as income from sources within a Contracting State only to the extent that such services are performed in that Contracting State. However, income from personal services performed aboard ships or aircraft operated by a resident of one of the Contracting States in international traffic shall be treated as income from sources within that Contracting State if rendered by a member of the regular complement of the ship or aircraft. Notwithstanding the preceding provisions of this paragraph, remuneration described in Article 20 (Governmental Functions) and payments described in Article 19 (Social Security Payments) paid from the public funds of a Contracting State or a political subdivision or local authority thereof shall be treated as income from sources within that Contracting State only. (6) . Notwithstanding paragraphs (1) 1 through (4), business profits which are attributable to a permanent establishment which the recipient, a resident of one of the Contracting States, has in the other Contracting State shall be treated as income from sources within that other Contracting State. (7) . Gross revenues from the operation of ships in international traffic shall be treated as from sources within a Contracting State to the extent they are derived from outgoing traffic originating in that State. (8) 8. The source of any item of income to which paragraphs (1) 1 through (7) 7 are not applicable shall be determined by each of the Contracting States in accordance with its own law. Notwithstanding the preceding sentence, if the source of any item of income under the laws of one Contracting State is different from the source of such item of income under the laws of the other Contracting State or if the source of such income is not readily determinable under the laws of one of the Contracting States, the competent authorities of the Contracting States may, in order to prevent double taxation or further any other purpose of this Convention, establish a common source of the item of income for purposes of this Convention.

Source of Income. For the purposes of this Convention: (1) . Dividends shall be treated as income from sources within a Contracting State only if- (a) Paid if paid by a corporation of that Contracting State, or (b) Paid by a corporation of any State if, for the 3-year period ending with the close of such corporation's taxable year preceding the declaration of the dividends (or for such part of that period as such corporation has been in existence), at least 50 percent of such corporation's gross income from all sources was business profits attributable to a permanent establishment which such corporation had in that Contracting State; but only in an amount which bears the same ratio to such dividends as the amount of the business profits attributable to that permanent establishment bears to the corporation's gross income from all sources. If a dividend would be treated under this paragraph as income from sources within both Contracting States, it shall be deemed to be income from sources only within the Contracting State described in subparagraph (b), to the extent provided therein. (2) . Interest shall be treated as income from sources within a Contracting State only if paid by such Contracting State, a political subdivision or a local authority thereof, or by a resident of that Contracting State. Notwithstanding the preceding sentence, if such interest is paid on an indebtedness incurred in connection with a permanent establishment which bears such interest, then such interest shall be deemed to be from sources within the State (whether or not a Contracting State) in which the permanent establishment is situated. 3. Royalties described in paragraph 2 of Article 14 (3Royalties) Royalties for the use of, or the right to use, property or rights described in such paragraph shall be treated as income from sources within a Contracting State only to the extent that such royalties are for the use of, or the right to use, such property or rights within that Contracting State. Notwithstanding the preceding sentence, if such royalty is paid with respect to a liability to pay the royalty that was incurred in connection with a permanent establishment which bears such royalty, then such royalty shall be deemed to be from sources within the State (whether or not a Contracting State) in which the permanent establishment is situated. (4) . Income from real property and gains (including royalties) described in to which Article 7 (Income from Real Propertyreal property) applies shall be treated as income from sources within a Contracting State only if the real property (or, in the case of property referred to in paragraph 3 of such Article 7, the underlying real property) is situated in that Contracting State. 5. Income from the rental of tangible personal (movable) property shall be treated as income from sources within a Contracting State only to the extent that such income is for the use of such property in that Contracting State. 6. Income from the purchase and sale, exchange, or other disposition of intangible or tangible personal property (other than gains described in paragraph 2 of Article 14 (Royalties)) shall be treated as income from sources within a Contracting State only if such property sale, exchange, or other disposition is situated in within that Contracting State. Notwithstanding the preceding sentence, gains derived by a resident of one Contracting State from the sale, exchange or other disposition of stock in a corporation of the other Contracting State to which paragraph 1(e) of Article 15 (Capital gains) applies shall be deemed to arise in that other State. (5) 7. Income received by an individual for his performance of labor or personal services, whether as an employee or in an independent capacity, shall be treated as income from sources within a Contracting State only to the extent that such services are performed in that Contracting State. However, income Income from personal services performed aboard ships or aircraft operated by a resident of one of the Contracting States in international traffic shall be treated as income from sources within that Contracting State if rendered by a member of the regular complement of the ship or aircraft. Notwithstanding the preceding provisions of this paragraph, remuneration described in Article 20 22 (Governmental Functionsfunctions) and payments described in Article 19 21 (Social Security Paymentssecurity payments) paid paid: (a) from the public funds of a Contracting State or a political subdivision or local authority thereof thereof; (b) by a corporation wholly owned by a Contracting State or a political subdivision or local authority thereof, which performs functions of a governmental nature; or (c) by any other body which is treated for tax purposes in the same manner as the Contracting State, a political subdivision or local authority thereof, pursuant to the laws of that State, which performs functions of a governmental nature, shall be treated as income from sources within that Contracting State only. (6) 8. Notwithstanding paragraphs (1) 1 through (4)6, business industrial or commercial profits which are attributable to a permanent establishment which the recipient, a resident of one of the Contracting States, has in the other Contracting State shall be treated as income from sources within that other Contracting State. (7) Gross revenues from the operation . Industrial or commercial profits attributable to such permanent establishment include any item of ships income described in international traffic shall be treated as from sources within a Contracting State paragraphs 1 through 6, to the extent they are derived from outgoing traffic originating provided in that Stateparagraph 6 of Article 8 (Business profits). (8) 9. The source of any item of income to which paragraphs (1) 1 through (7) 8 are not applicable shall be determined by each of the Contracting States in accordance with its own law. Notwithstanding the preceding sentence, if the source of any item of income under the laws of one Contracting State is different from the source of such item of income under the laws of the other Contracting State or if the source of such income is not readily determinable under the laws of one of the Contracting States, the competent authorities of the Contracting States may, in order to prevent double taxation or further any other purpose of this Convention, establish a common source of the item of income for purposes of this Convention.