Taxation of government service income: the sovereign employer generally retains taxing rights, with residency-based exceptions.

Salaries, wages and similar remuneration paid by a Contracting State or its political subdivisions for services rendered to that State are taxable only in the paying State, subject to a residency-based exception allowing the other State to tax if the services are performed there and the individual is a resident who is a national or did not become resident solely to render the services. Pensions paid by or from State-created funds are likewise taxable only in the paying State, except where the recipient is both resident and national of the other State. Remuneration for services connected with a State-carried business is governed by the rules applicable to employment and business income.

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