UNITED STATES - POLAND INCOME TAX CONVENTION

1 UNITED STATES - POLAND INCOME TAX CONVENTIONC onvention signed at Washington October 8, 1974;Ratification advised by the Senate of the UNITED STATES of America November 18, 1975;Ratified by the President of the UNITED STATES of America December 15, 1975;Ratified by the Polish People's Republic June 10, 1976;Proclaimed by the President of the UNITED STATES of America July 23, 1976;Entered into force July 22, 1976;GENERAL EFFECTIVE DATE UNDER ARTICLE 25: 1 JANUARY 1974 TABLE OF ARTICLESA rticle 1----------------------------------Scope of ConventionArticle 2----------------------------------Taxes Covered by the ConventionArticle 3----------------------------------Gener al DefinitionsArticle 4----------------------------------Fisca l ResidenceArticle 5----------------------------------Gener al Rules of TaxationArticle 6----------------------------------Perma nent EstablishmentArticle 7----------------------------------Incom e from Real PropertyArticle 8----------------------------------Busin ess ProfitsArticle 9----------------------------------Shipp ing and Air TransportArticle 10--------------------------------Relate d PersonsArticle 11--------------------------------Divide ndsArticle 12--------------------------------Intere stArticle 13--------------------------------Royalt iesArticle 14--------------------------------Capita l GainsArticle 15--------------------------------Indepe ndent Personal ServicesArticle

2 16--------------------------------Depend ent Personal ServicesArticle 17--------------------------------Teache rsArticle 18--------------------------------Studen ts and TraineesArticle 19--------------------------------Govern mental FunctionsArticle 20--------------------------------Relief from Double TaxationArticle 21--------------------------------Nondis criminationArticle 22--------------------------------Mutual Agreement ProcedureArticle 23--------------------------------Exchan ge of InformationArticle 24--------------------------------Diplom atic and Consular OfficersArticle 25--------------------------------Entry into forceArticle 26--------------------------------Termin ationLetter of Submittal---------------------of 11 December, 1974 Letter of Transmittal-------------------of 23 January, 1975 Notes of Exchange---------------------of 8 October, 1974 The Saving Clause -------------------Paragraph 3 of Article 5 MESSAGEFROMTHE PRESIDENT OF THE UNITED STATESTRANSMITTINGTHE CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED STATES OFAMERICA AND THE GOVERNMENT OF THE POLISH PEOPLE'S REPUBLIC FOR THEAVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCALEVASION WITH RESPECT TO INCOME , AND A RELATED EXCHANGE OF NOTES,SIGNED AT WASHINGTON ON OCTOBER 8, 1974 LETTER OF SUBMITTALDEPARTMENT OF STATE,Washington, December 11, PRESIDENT,The White House.

3 The PRESIDENT: I have the honor to submit to you, with a view to its transmission to theSenate for advice and consent to ratification, the CONVENTION between the Government of theUnited STATES of America and the Government of the Polish People's Republic for the Avoidanceof Double Taxation and the Prevention of Fiscal Evasion with Respect to INCOME , and a relatedexchange of notes, signed at Washington on October 8, 1974. The CONVENTION deals mainly with Federal INCOME taxes in the case of the UNITED STATES andwith substantially similar INCOME taxes specified in Article 2 (2) (a) in the case of POLAND . Theprovision relating to nondiscrimination applies, however, to taxes of every kind imposed at thenational, state, or local 1evel. This CONVENTION is similar to other recent tax conventions concluded by this government. Itincorporates the same basic principles with respect to the taxation of business INCOME , personalservice INCOME and INCOME from investments, and includes provisions for nondiscriminatory taxtreatment and for reciprocal administrative cooperation.

4 Pursuant to this CONVENTION profits derived by a business enterprise of one country would besubject to taxation by the other country only to the extent that the profits are attributable to a permanent establishment ' in that other country. Employees of a firm are not taxable by the hostcountry on their personal service INCOME unless the services are performed there during a staylasting longer than six months during the taxable year concerned. Withholding taxes imposed onincome going from one country to residents of the other country will be limited to 15 percent onportfolio dividends, 5 percent on dividends from a share holding of 10 percent or more, and 10percent on royalties and film rentals, and interest will be exempt from tax. In the absence of aconvention the UNITED STATES tax rate has been 30 percent of the gross amount, and the Polish tax,although computed at graduated rates, also reaches 30 percent of the gross amount. A technical memorandum explaining in detail the provisions and effect of the CONVENTION isbeing prepared by the Department of the Treasury and will be submitted to the Senate ForeignRelations Committee for consideration in connection with the CONVENTION .

5 Upon entry into force, this CONVENTION will be effective from January 1, 1974, and willremain in force for a minimum period of five years. After the initial five year period it willremain in force indefinitely until terminated by either State. The Department of the Treasury, with the cooperation of the Department of State, wasprimarily responsible for the negotiation of the CONVENTION . It has the approval of bothDepartments. Respectfully submitted,ROBERT S. OF TRANSMITTALTHE WHITE HOUSE, January 23, the Senate of the UNITED STATES : I transmit herewith, for Senate advise and consent to ratification, the CONVENTION between theGovernment of the UNITED STATES of America and the Government of the Polish People sRepublic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion withRespect to INCOME as well as a related exchange of notes. I also transmit for the information of the Senate, the report of the Department of State withrespect to this CONVENTION .

6 The CONVENTION was signed on October 8, 1974, during the visit to Washington of PolishFirst Secretary Edward Gierek and is the first INCOME tax CONVENTION between the two CONVENTION is similar to other INCOME tax conventions recently concluded by thisGovernment and it is expected to encourage and support the growing interest in bilateral tradeand investment between the two countries. It provides rules of tax jurisdiction, reduces oreliminates tax liability in certain cases, ensures nondiscriminatory tax treatment and provides foradministrative cooperation. I recommend that the Senate give this CONVENTION and related exchange of notes early andfavorable consideration and give its advice and consent to R. THE PRESIDENT OF THE UNITED STATES OF AMERICAA PROCLAMATION CONSIDERING THAT: The CONVENTION between the UNITED STATES of America and the Polish People's Republic forthe avoidance of double taxation and the prevention of fiscal evasion with respect to taxes onincome and a related exchange of notes were signed at Washington on October 8, 1974, the textsof which CONVENTION and related notes, are hereto annexed; The Senate of the UNITED STATES of America by its resolution of November 18, 1975, two-thirds of the Senators present concurring therein, gave its advice and consent to ratification of theConvention and related notes; The CONVENTION and related notes were ratified by the President of the UNITED STATES ofAmerica on December 15, 1975, in pursuance of the advice and consent of the Senate, and wasduly ratified on the part of the Polish People's Republic on June 10, 1976.

7 It is provided in Article 25 of the CONVENTION that the CONVENTION shall enter into force thirtydays after the date of exchange of instruments of ratification, with effectiveness from January 1,1974, with respect to INCOME ; The instruments of ratification of the CONVENTION were exchanged at Warsaw on June 22,1976; and accordingly the CONVENTION and related notes, enter into force on July 22, 1976, witheffectiveness from January 1, 1974, with respect to INCOME ; NOW, THEREFORE, I, Gerald R. Ford, President of the UNITED STATES of America, proclaimand make public the CONVENTION and related notes, to the end that they shall be observed andfulfilled with good faith on and after July 22, 1976, by the UNITED STATES of America and by thecitizens of the UNITED STATES of America and all other persons subject to the jurisdiction thereof. IN TESTIMONY WHEREOF, I have signed this proclamation and caused the Seal of theUnited STATES of America to be affixed.

8 DONE at the city of Washington this twenty-third day of July in the year of our Lord onethousand nine hundred seventy-six and of the Independence of the UNITED STATES of America thetwo hundred first. By the President:GERALD R. FORDH enry A. KissingerSecretary of StateCONVENTION BETWEEN THE GOVERNMENT OF THE UNITED STATES OFAMERICA AND THE GOVERNMENT OF THE POLISH PEOPLE'S REPUBLIC FOR THEAVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASIONWITH RESPECT TO TAXES ON INCOME The Government of the UNITED STATES of America and the Government of the Polish People'sRepublic, desiring to further expand and facilitate mutual economic relations, have resolved toconclude a CONVENTION for the avoidance of double taxation and the prevention of fiscal evasionwith respect to taxes on INCOME and have agreed upon the following:ARTICLE 1 Scope of CONVENTION This CONVENTION shall apply to persons who are residents of one or both of the 2 Taxes Covered by the CONVENTION (1) This CONVENTION shall apply to taxes on INCOME imposed by each Contracting State.

9 (2) The taxes existing at present, to which the CONVENTION applies, are:(a) In the case of the Polish People's Republic:(i) The INCOME tax,(ii) The tax on salaries and wages, and(iii) The equalization tax (Surtax), and(b) In the case of the UNITED STATES of America, the Federal INCOME taxes imposedby the Internal Revenue Code (other than employment taxes imposed by chapters 2 and21). (3) The CONVENTION shall also apply to any identical or substantially similar taxes which aresubsequently imposed in addition to, or in place of, the existing taxes. (4) For the purpose of Article 21, this CONVENTION shall also apply to taxes imposed at thenational, state, or local level, subject to any limitation contained in paragraph (4) of Article 21. (5) The competent authorities of the Contracting STATES shall notify each other of anyamendments of the tax laws referred to in paragraph (2) and of the adoption of any taxes referredto in paragraph (3) by transmitting the texts of any amendments or new statutes at least once 3 General Definitions (1) In this CONVENTION , unless the context otherwise requires:(a) The term " POLAND " means the Polish People's Republic, and when used in ageographical sense the term " POLAND " includes.

10 (i) The territorial sea thereof, and(ii) The seabed and subsoil of the submarine areas adjacent to the coastthereof, but beyond the territorial sea, over which POLAND exercises Sovereignrights, in accordance with international law, for the purpose of exploration for andexploitation of the natural resources of such areas, but only to the extent that theperson, property, or activity to which this CONVENTION is being applied isconnected with such exploration or exploitation.(b) The term " UNITED STATES " means the UNITED STATES of America, and when usedin a geographical sense the term " UNITED STATES " means the STATES thereof and the Districtof Columbia and also includes:(i) The territorial sea thereof, and(ii) The seabed and subsoil of the submarine areas adjacent to the coastthereof, but beyond the territorial sea, over which the UNITED STATES exercisessovereign rights, in accordance with international law, for the purpose ofexploration for and exploitation of the natural resources of such areas, but only tothe extent that the person, property, or activity to which this CONVENTION is beingapplied is connected with such exploration or exploitation.