Residence-based taxation for residual income, except where income is effectively connected to a permanent establishment or fixed base.

Residence-based taxation applies to income not dealt with elsewhere in the Convention, making such income taxable only in the recipient's State of residence. Exceptions permit source taxation where the resident carries on business through a permanent establishment or performs independent services from a fixed base and the income is effectively connected with that permanent establishment or fixed base, in which case the provisions on business profits or independent personal services apply. Winnings from lotteries and gambling sourced in the other State may be taxed in that State.

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