ARTICLE III
Article 18 (Pensions) of the Convention shall be deleted and replaced by the following:
“ARTICLE 18 - Pensions
1. Payments under the social security legislation or similar legislation of a Contracting
State to a resident of the other Contracting State, and pension distributions and other similar
remuneration arising in one of the Contracting States in consideration of past employment paid
to a resident of the other contracting State, whether paid periodically or in a lump sum, shall be
taxable only in the first-mentioned State. For purposes of this paragraph, pension distributions
and other similar remuneration shall be deemed to arise in a Contracting State only if paid by a
pension or other retirement arrangement established in that State.
2. (a) Where an individual renders personal services and is a resident of a Contracting
State but not a national of that State, and that individual is a participant in a pension
or other retirement arrangement that is established, maintained, and recognized for tax
purposes in the other Contracting State:
(i) contributions paid by, or on behalf of, such individual to such pension or
retirement arrangement shall be deductible from the income taxable in the
first-mentioned State as if the contributions had been paid to a pension or
other retirement arrangement that is established, maintained, and
recognized for tax purposes in that State, subject to the same monetary
limits provided for by the law of that State; and
(ii) in the case of dependent personal services, any benefits accrued under
such arrangement or payments made to such an arrangement by or on
behalf of the individual’s employer shall be excluded from the
individual’s income taxable in the first-mentioned State and shall be
allowed as a deduction in computing the profits of the employer in that
State as if the contributions had been paid to a pension or other
retirement arrangement that is established, maintained, and recognized
for tax purposes in that State, subject to the same monetary limits
provided for by the law of that State.
(b) The provisions of this paragraph shall not apply unless:
(i) contributions by or on behalf of the individual to the pension or other
retirement arrangement (or to another similar arrangement for which this
arrangement was substituted) were made before he arrived in the first-
mentioned State; and
(ii) the competent authority of the first-mentioned State agrees that the
arrangement generally corresponds to a pension or other retirement
arrangement established, maintained, and recognized for tax purposes in
the first-mentioned State.
(c) For purposes of this paragraph:
(i) in the case of the United States, it is understood that a French pension or
other retirement arrangement organized under the French social security
legislation shall be considered to generally correspond to a pension or
other retirement arrangement established, maintained, and recognized for
tax purposes in the United States; and
(ii) in the case of France, it is understood that the social security or similar
legislation of the United States, qualified plans under section 401(a) of
the Internal Revenue Code, individual retirement plans (including
individual retirement plans that are part of a simplified employee pension
plan that satisfies section 408(k), individual retirement accounts,
individual retirement annuities, and section 408(p) accounts), section
403(a) qualified annuity plans, and section 403(b) plans shall be
considered to generally correspond to a pension or other retirement
arrangement established, maintained, and recognized for tax purposes in
France; and
(iii) a pension or other retirement arrangement is recognized for tax purposes
in a Contracting State if the contributions to the arrangement would
qualify for tax relief in that State.”