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US income tax treaties

The United States has income tax treaties with numerous foreign countries.

Pursuant to these treaties, residents (not necessarily citizens) of foreign countries may be taxed at a reduced rate or are exempt from US income tax on certain items of income that the taxpayer receives from sources within the US. These reduced rates and exemptions vary among countries and specific items of income.

Most US treaties include an article related to the taxation of dependent personal services. Pursuant to this treaty article, an employee is generally able to avoid US taxation where the employee has limited days in the US and the employee's costs are not borne by a permanent establishment in the US.

Some treaties also include a de minimis amount of wages for which the employee can avoid US tax.

Treaties should be read carefully when considering the taxation of pensions arising from employment and the taxation of lump sum payments from pensions. For example, the UK-USA treaty specifically assigns taxing rights over lump sum pension income to the country from which