## Article 3: general definitions
- 1. For the purposes of this Convention, unless the context otherwise requires:
- (a) the term ‘person’ includes an individual, an estate, a trust, a partnership, a company, and any other body of persons;
- (b) the term ‘company’ means any body corporate or any entity that is treated as a body corporate for tax purposes;
- (c) the term ‘enterprise’ applies to the carrying on of any business;
- (d) the term ‘business’ includes the performance of professional services and of other activities of an independent character;
- (e) the terms ‘enterprise of a Contracting State’ and ‘enterprise of the other Contracting State’ mean respectively an enterprise carried on by a resident of a Contracting State, and an enterprise carried on by a resident of the other Contracting State;
- (f) the term ‘international traffic’ means any transport by a ship or aircraft, except when the ship or aircraft is operated solely between places in the other Contracting State;
- (g) the term ‘competent authority’ means:
- (i) in the United States: the Secretary of the Treasury or his delegate; and
- (ii) in the United Kingdom: the Commissioners of Inland Revenue or their authorised representative;
- (h) the term ‘United States’ means the United States of America, and includes the states thereof and the District of Columbia; such term also includes the territorial sea thereof and the sea bed and sub-soil of the submarine areas adjacent to that territorial sea, over which the United States exercises sovereign rights in accordance with international law; the term, however, does not include Puerto Rico, the Virgin Islands, Guam or any other United States possession or territory;
- (i) the term ‘United Kingdom’ means Great Britain and Northern Ireland, including any area outside the territorial sea of the United Kingdom which in accordance with international law has been or may hereafter be designated, under the laws of the United Kingdom concerning the Continental Shelf, as an area within which the rights of the United Kingdom with respect to the sea bed and sub-soil and their natural resources may be exercised;
- (j) the term ‘national’ of a Contracting State, means:
- (i) in relation to the United States,
- (A) any individual possessing the citizenship of the United States; and
- (B) any legal person, partnership, association or other entity deriving its status as such from the laws in force in the United States;
- (ii) in relation to the United Kingdom,
- (A) any British citizen, or any British subject not possessing the citizenship of any other Commonwealth country or territory, provided he has the right of abode in the United
Kingdom; and
- (B) any legal person, partnership, association or other entity deriving its status as such from the laws in force in the United Kingdom;
- (k) the term ‘qualified governmental entity’ means:
- (i) a Contracting State, or a political subdivision or local authority of a Contracting State;
- (ii) a person that is wholly owned, directly or indirectly, by a Contracting State or a political subdivision or local authority of a Contracting State, provided
- (A) it is organized under the laws of the Contracting State;
- (B) its earnings are credited to its own account with no portion of its income inuring to the benefit of any private person;
- (C) its assets vest in the Contracting State, political subdivision or local authority upon dissolution; and
- (D) it does not carry on a business;
- (l) the term ‘Contracting State’ means the United States or the United Kingdom, as the context requires;
- (m) the term ‘real property’ means any interest (other than an interest solely as a creditor) in land, crops or timber growing on land, mines, wells and other places of extraction of natural resources, as well as any fixture built on land (buildings, structures, etc.) and other property considered real or immovable property under the law of the Contracting State in which the property in question is situated. The term shall in any case include livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of real property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits and other natural resources; ships, boats and aircraft shall not be regarded as real property.
- (n) the term ‘conduit arrangement’ means a transaction or series of transactions:
- (i) which is structured in such a way that a resident of a Contracting State entitled to the benefits of this Convention receives an item of income arising in the other Contracting State but that resident pays, directly or indirectly, all or substantially all of that income (at any time or in any form) to another person who is not a resident of either Contracting State and who, if it received that item of income direct from the other Contracting State, would not be entitled under a convention for the avoidance of double taxation between the state in which that other person is resident and the Contracting State in which the income arises, or otherwise, to benefits with respect to that item of income which are equivalent to, or more favourable than, those available under this Convention to a resident of a Contracting State; and
- (ii) which has as its main purpose, or one of its main purposes, obtaining such increased benefits as are available under this Convention.
- o) the term ‘pension scheme’ means any plan, scheme, fund, trust or other arrangement established in a Contracting State which is:
- (i) generally exempt from income taxation in that State; and
- (ii) operated principally to administer or provide pension or retirement benefits or to earn income for the benefit of one or more such arrangements.
- 2. As regards the application of this Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, or the competent authorities agree on a common meaning pursuant to the provisions of Article 26 (Mutual Agreement Procedure) of this Convention, have the meaning which it has at that time under the law of that State for the purposes of the taxes to which this Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.