ARTICLE 19 — U.S. Income Tax Treaty

Government Service

This Article provides that wages, salaries and similar remuneration, including pensions, paid to a citizen of a Contracting State out of the public funds of that Contracting State or a political subdivision or local authority of that State will be exempt from tax by the other Contracting State if the payment is for services rendered by the citizen in the discharge of governmental functions.

Payments to employees of a Contracting State who are not citizens of that Contracting State, and payments for services which are not in the discharge of governmental functions or are rendered in connection with a business carried on by that State, political subdivision or local authority, are, as appropriate, dealt within the other Articles of the Convention dealing with the

taxation of income from personal services. For example, a resident of the United States who is not a United States citizen and who is employed in the United States Embassy in Barbados, will be subject to the provisions of Article 15 (Dependent Personal Services) in the determination of his tax liability, if any, to Barbados. The taxation of his pension by Barbados in respect of his United States Government service will be determined under the provisions of Article 18 (Pensions, Annuities, Alimony and Child Support).

The provisions of this Article are not subject to the saving clause of paragraph 3 of Article 1 (General Scope) in respect of an individual who is neither a citizen nor a resident with immigrant status in the Contracting State in which the services are performed. In other cases the clause does apply. Thus, if a citizen of Barbados is employed in the Barbadian Embassy in Washington, and that individual is also a citizen of the United States or has immigrant status in the United States (i.e., he holds a green card), the United States may tax the salary of that individual without regard to this Article. If, however, he is neither a citizen of the United States, nor has immigrant status there, the provisions of this Article will be applicable.

Whether functions are of a governmental nature is determined by reference to the concept of a governmental function in the State in which the income arises.