Dependent Personal Services – DTAA (Salary)


Dependent Personal Services as per DTAA

The OECD model tax treaty provides rules for the treatment of salaries, wages and other similar remuneration (i.e. employment income) under the heading "dependent personal services". As a general rule, with some exceptions, the right to tax income from dependent personal services is allocated to the country where the employment activities are exercised.

The following payments are not covered Directors' Fees, Income Earned by Entertainers and Athletes, Remuneration and Pensions in respect of Government Service, Private Pensions, Annuities, Alimony and Child Support, Payments received by Students and Apprentices and Payments received by Professors, Teachers and Research Scholars.

Taxability under DTAA

  • Salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived there from may be taxed in that other State.
  • However, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:
  • a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any 12 month period commencing or ending in the fiscal year concerned, and
  • b) The remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and
  • c) The remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.