PROTOCOL AMENDING

THE CONVENTION BETWEEN

THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND

THE GOVERNMENT OF THE UNITED KINGDOM

OF GREAT BRITAIN AND NORTHERN IRELAND

FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE

PREVENTION OF FISCAL EVASION

WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL GAINS,

SIGNED AT LONDON ON 24th JULY 2001

The Government of the United States of America and the Government of the United 

Kingdom of Great Britain and Northern Ireland; 

Desiring to conclude a Protocol to amend the Convention for the Avoidance of Double 

Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital 

Gains, signed at London on 24 July 2001 (hereinafter referred to as “the Convention”); 

Have agreed as follows: 
ARTICLE I 

Paragraph 5 of Article 1 of the Convention shall be deleted and replaced by the 

following: 

“5. The provisions of paragraph 4 of this Article shall not affect: 

a) the benefits conferred by a Contracting State under paragraph 2 of Article 9 

(Associated Enterprises), sub-paragraph b) of paragraph 1 and paragraphs 3 and 5 of 

Article 17 (Pensions, Social Security, Annuities, Alimony, and Child Support), 

paragraphs 1 and 5 of Article 18 (Pension Schemes) and Articles 24 (Relief From 

Double Taxation), 25 (Non-discrimination), and 26 (Mutual Agreement Procedure) of 

this Convention; and 

b) the benefits conferred by a Contracting State under paragraph 2 of Article 18 

(Pension Schemes) and Articles 19 (Government Service), 20 (Students), 20A 

(Teachers), and 28 (Diplomatic Agents and Consular Officers) of this Convention, upon 

individuals who are neither citizens of, nor have been admitted for permanent residence 

in, that State.” 

ARTICLE II 

Paragraph 4 of Article 10 of the Convention shall be deleted and replaced by the 

following: 

“4. Sub-paragraph a) of paragraph 2 and sub-paragraph a) of paragraph 3 of this Article 

shall not apply in the case of dividends paid by a pooled investment vehicle which is a resident of 

a Contracting State. Sub-paragraph b) of paragraph 2 and sub-paragraph b) of paragraph 3 of this 

Article shall apply in the case of dividends paid by a pooled investment vehicle, the assets of 

which consist wholly or mainly of shares, securities or currencies or derivative contracts relating 

to shares, securities or currencies. In the case of dividends paid by a pooled investment vehicle 

not described in the preceding sentence, sub-paragraph b) of paragraph 2 and sub-paragraph b) of 

paragraph 3 of this Article shall apply only if 

a) the beneficial owner of the dividends is an individual or pension scheme, in 

either case holding an interest of not more than 10 per cent. in the pooled investment 

vehicle; 

b) the dividends are paid with respect to a class of stock that is publicly traded 

and the beneficial owner of the dividends is a person holding an interest of not more 

than 5 per cent. of any class of the stock of the pooled investment vehicle; or 

c) the beneficial owner of the dividends is a person holding an interest of not 

more than 10 per cent. in the pooled investment vehicle and that vehicle is diversified.” 

ARTICLE III 

The following new Article 20A shall be inserted: 

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“ARTICLE 20A 

Teachers 

1. A professor or teacher who visits one of the Contracting States for a period not 

exceeding two years for the purpose of teaching or engaging in research at a university, college 

or other recognised educational institution in that Contracting State and who was immediately 

before that visit a resident of the other Contracting State, shall be exempted from tax by the 

first-mentioned Contracting State on any remuneration for such teaching or research for a 

period not exceeding two years from the date he first visits that State for such purpose. 

2. The exemption provided in this Article may be applied by the Contracting State in 

which the teaching or research is performed to current payments to such professor or teacher in 

anticipation or fulfilment of the requirements of paragraph 1 or by way of withholding and 

refund, but in either case exemption shall be conditional upon fulfilment of the requirements of 

paragraph 1. 

3. This Article shall apply to income from research only if such research is undertaken 

by the professor or teacher in the public interest and not primarily for the benefit of some other 

private person or persons.” 

ARTICLE IV 

Sub-paragraph d) of paragraph 7 of Article 23 of the Convention shall be deleted and 

replaced by the following: 

“d) an equivalent beneficiary is a resident of a Member State of the European 

Community or of a European Economic Area state or of a party to the North 

American Free Trade Agreement but only if that resident: 

(i) A) would be entitled to all the benefits of a comprehensive 

convention for the avoidance of double taxation between any Member State of 

the European Community or a European Economic Area state or any party to the 

North American Free Trade Agreement and the Contracting State from which 

the benefits of this Convention are claimed, provided that if such convention 

does not contain a comprehensive limitation on benefits article, the person 

would be a qualified person under paragraph 2 of this Article (or for the 

purposes of sub-paragraph g) of paragraph 2, under the provisions specified in 

clause ( i) of that sub-paragraph) if such person were a resident of one of the 

Contracting States under Article 4 (Residence) of this Convention; and 

B) with respect to income referred to in Article 10 (Dividends), 

11 (Interest) or 12 (Royalties) of this Convention, would be entitled under such 

convention to a rate of tax with respect to the particular class of income for 

which benefits are being claimed under this Convention that is at least as low as 

the rate applicable under this Convention; or 

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(ii) is a qualified person by reason of sub-paragraphs a), b), clause (i) of 

sub-paragraph c), clause ( i) of sub-paragraph d), or sub-paragraph e) of 

paragraph 2 of this Article. 

For the purposes of applying paragraph 3 of Article 10 (Dividends) in order to determine 

whether a person, owning shares, directly or indirectly, in the company claiming the benefits of 

this Convention, is an equivalent beneficiary, such person shall be deemed to hold the same 

voting power in the company paying the dividend as the company claiming the benefits holds 

in such company.” 

ARTICLE V 

1. Paragraph 3 of Article 29 of the Convention shall be deleted and replaced by the 

following: 

“3. a) The Convention between the Government of the United States of America and 

the Government of the United Kingdom of Great Britain and Northern Ireland for the 

Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to 

Taxes on Income and Capital Gains, signed at London on December 31st, 1975, as 

modified by subsequent notes and protocols (“the prior Convention”) shall cease to have 

effect in relation to any tax with effect from the date on which this Convention has effect 

in relation to that tax in accordance with paragraph 2 of this Article. In relation to tax 

credits in respect of dividends paid by companies which are residents of the United 

Kingdom, the prior Convention shall terminate and cease to be effective in respect of 

dividends paid on or after the first day of the second month next following the date on 

which this Convention enters into force. 

b) Notwithstanding sub-paragraph a) of this paragraph, where any person 

entitled to benefits under the prior Convention would have been entitled to greater 

benefits thereunder than under this Convention, the prior Convention shall, at the 

election of such person, continue to have effect in its entirety with respect to that person 

for a twelve-month period from the date on which the provisions of this Convention 

otherwise would have effect under paragraph 2 of this Article. The prior Convention 

shall terminate on the last date on which it has effect in relation to any tax or to any 

entitlement to tax credits in accordance with the foregoing provisions of this subparagraph.” 

2. Paragraph 4 of Article 29 of the Convention shall be deleted and paragraph 5 shall be 

re-numbered as paragraph 4. 

ARTICLE VI 

1. This Protocol shall be subject to ratification in accordance with the applicable 

procedures of each Contracting State and instruments of ratification shall be exchanged as soon 

as possible. 

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2. This Protocol shall enter into force upon the exchange of instruments of ratification, 

and shall thereupon have effect in accordance with Article 29 of the Convention. 

ARTICLE VII 

This Protocol shall remain in force as long as the Convention remains in force. 

IN WITNESS WHEREOF, the undersigned, being duly authorized thereto by their 

respective Governments, have signed this Convention. 

DONE at Washington, in duplicate, this 19th day of July, 2002. 

FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF 

THE UNITED STATES OF AMERICA: THE UNITED KINGDOM OF 

GREAT BRITAIN AND 

NORTHERN IRELAND: 

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