The Government of the United States of America and the Government of the Republic of Lithuania, desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed as follows: ARTICLE 1 General Scope 　　1. This Convention shall apply to persons who are residents of one or both of the Contracting States, except as otherwise provided in the Convention. 　　2. The Convention shall not restrict in any manner any exclusion, exemption, deduction, credit, or other allowance now or hereafter accorded: 　　a) by the laws of either Contracting State; or 　　b) by any other agreement between the Contracting States. 　　3. Notwithstanding the provisions of subparagraph 2 b): 　　a) the provisions of Article 26 (Mutual Agreement Procedure) of this Convention exclusively shall apply to any dispute concerning whether a measure is within the scope of this Convention, and the procedures under this Convention exclusively shall apply to that dispute; and 　　b) unless the competent authorities determine that a taxation measure is not within the scope of this Convention, the nondiscrimination obligations of this Convention exclusively shall apply with respect to that measure, except for such national treatment or most-favored-nation obligations as may apply to trade in goods under the General Agreement on Tariffs and Trade. No national treatment or most-favored-nation obligation under any other agreement shall apply with respect to that measure. 　　c) For the purpose of this paragraph, a "measure" is a law, regulation, rule, procedure, decision, administrative action, or any similar provision or action. 　　4. Notwithstanding any provision of the Convention except paragraph 5 of this Article, a Contracting State may tax its residents (as determined under Article 4 (Resident)), and by reason of citizenship may tax its citizens, as if the Convention had not come into effect. For this purpose, the term "citizen" shall include a former citizen or long-term resident whose loss of such status had as one of its principal purposes the avoidance of tax, but only for a period of 10 years following such loss. 　　5. The provisions of paragraph 4 shall not affect: 　　a) the benefits conferred by a Contracting State under paragraph 2 of Article 9 (Associated Enterprises), under paragraphs 2 and 5 of Article 18 (Pensions, Social Security, Annuities, Alimony, and Child Support), and under Articles 24 (Relief from Double Taxation), 25 (Nondiscrimination) and 26 (Mutual Agreement Procedure); and b) the benefits conferred by a Contracting State under Articles 19 (Government Service), 20 (Students, Trainees and Researchers), and 28 (Members of Diplomatic Missions and Consular Posts), upon individuals who are neither citizens of, nor have been admitted for permanent residence in, that State. ARTICLE 2 Taxes Covered 　　1. The existing taxes to which the Convention shall apply are: 　　a) in the United States: the Federal income taxes imposed by the Internal Revenue Code (but excluding the accumulated earnings tax, the personal holding company tax, and social security taxes), and the excise taxes imposed with respect to the investment income of private foundations (hereafter referred to as "United States tax"); 　　b) in Lithuania: the tax on profits of legal persons (juridiniu asmenu pelno mokestis), and the tax on income of natural persons (fiziniu asmenu pajamu mokestis) (hereafter referred to as "Lithuanian tax"). 　　2. The Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws or other laws affecting their obligations under the Convention, and of any official published material concerning the application of the Convention, including explanations, regulations, rulings, or judicial decisions. ARTICLE 3 General Definitions 　　1. For the purposes of this Convention, unless the context otherwise requires: 　　a) the term "Contracting State" means the United States or Lithuania as the context requires; 　　b) the term "United States" means the United States of America, but does not include Puerto Rico, the Virgin Islands, Guam, or any other United States possession or territory. When used in a geographical sense, the term "United States" includes any area adjacent to the territorial waters of the United States within which under the laws of the United States and in accordance with international law, the rights of the United States may be exercised with respect to the sea bed and its subsoil and their natural resources; 　　c) the term "Lithuania" means the Republic of Lithuania and, when used in the geographical sense, means the territory of the Republic of Lithuania and any other area adjacent to the territorial waters of the Republic of Lithuania within which under the laws of the Republic of Lithuania and in accordance with international law, the rights of Lithuania may be exercised with respect to the sea bed and its subsoil and their natural resources; 　　d) the term "person" includes an individual, an estate, a trust, a partnership, a company, and any other body of persons; 　　e) the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes; 　　f) 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; 　　g) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when such transport is solely between places in the other Contracting State; 　　h) the term "competent authority" means: 　　(i) in the United States, the Secretary of the Treasury or his delegate; and 　　(ii) in Lithuania, the Minister of Finance or his authorized representative; 　　i) the term "national" means: 　　(i) any individual possessing the nationality of a Contracting State; and 　　(ii) any legal person, partnership, association or, in the case of Lithuania, personal enterprise without rights of a legal person deriving its status as such from the laws in force in a Contracting State. 　　2. As regards the application of the Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires or the competent authorities agree to a common meaning pursuant to the provisions of Article 26 (Mutual Agreement Procedure), have the meaning which it has at that time under the laws of that State for the purposes of the taxes to which the 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. ARTICLE 4 Resident 　　1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his residence, domicile, citizenship, place of management, place of incorporation, or any other criterion of a similar nature. 　　2. a) However, the term "resident of a Contracting State" does not include any person who is liable to tax in that State in respect only of income from sources in that State; 　　b) in the case of income derived or paid by a partnership, estate, or trust, this term applies only to the extent that the income derived by such partnership, estate, or trust is subject to tax in that State as the income of a resident, either in its hands or in the hands of its partners or beneficiaries; and 　　c) if an individual is liable to tax as a resident because the individual is a citizen or permanent resident of a Contracting State and such resident is not also a resident of the other Contracting State, then the other State shall consider that individual to be a resident of the first-mentioned State only if the individual has a substantial presence, permanent home or habitual home in the first-mentioned State. If the individual is a resident of both Contracting States, his State of residence shall be determined under paragraph 4. 　　3. The term "resident of a Contracting State" includes: 　　a) that State, a political subdivision, or a local authority thereof, and any agency or instrumentality of any such State, subdivision or authority; and 　　b) a legal person organized under the laws of a Contracting State and that is generally exempt from tax in that State because it is established and maintained in that State either: 　　(i) exclusively for a religious, charitable, educational, scientific, or other similar purpose; or 　　(ii) to provide pensions or other similar benefits to employees pursuant to a plan. 　　4. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows: 　　a) he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (center of vital interests); 　　b) if the State in which he has his center of vital interests cannot be determined, or if he does not have a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode; 　　c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national; 　　d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. 　　5. Where by reason of the provisions of paragraph 1 a company is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavor to settle the question by mutual agreement. In the absence of such agreement, such company shall not be considered to be a resident of either Contracting State for the purposes of enjoying benefits under this Convention. 　　6. Where by reason of the provisions of paragraph 1 a person other than an individual or a company is a resident of both Contracting States, the competent authorities of the Contracting States shall settle the question by mutual agreement and determine the mode of application of the Convention to such person. ARTICLE 5 Permanent Establishment 　　1. For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on. 　　2. The term "permanent establishment" includes especially: 　　a) a place of management; 　　b) a branch; 　　c) an office; 　　d) a factory; 　　e) a workshop; and 　　f) a mine, an oil or gas well, a quarry, or any other place of extraction of natural resources. 　　3. The term "permanent establishment" also includes a building site or construction or installation project, but only if it lasts more than 6 months. 　　4. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include: 　　a) the use of facilities solely for the purpose of storage, display, or delivery of goods or merchandise belonging to the enterprise; 　　b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display, or delivery; 　　c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise; 　　d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise; 　　e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; 　　f) the maintenance of a fixed place of business solely for any combination of the activities mentioned in subparagraphs a) to e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character. 　　5. Notwithstanding the provisions of paragraphs 1 and 2, where a person (other than an agent of an independent status to whom paragraph 6 applies) is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph. 　　6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent, or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, where the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and where the conditions between the agent and the enterprise differ from those which would be made between independent persons, such agent shall not be considered an agent of independent status within the meaning of this paragraph. In such case the provisions of paragraph 5 shall apply. 　　7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other. ARTICLE 6 Income from Immovable (Real) Property 　　1. Income derived by a resident of a Contracting State from immovable (real) property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State. 　　2. The term "immovable (real) property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The provisions of this Convention relating to immovable (real) property shall apply also to property accessory to immovable (real) property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, any option or similar right to acquire immovable (real) property, usufruct of immovable (real) property and rights to variable or fixed payments relating to the production from, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable (real) property. The provisions of this Convention relating to immovable (real) property shall also apply to rights to assets to be produced by the exploration or exploitation of the sea bed and subsoil and their natural resources in the Contracting State, including rights to interests in, or to the benefits of, such assets. 　　3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable (real) property. 　　4. Where the ownership of shares or other corporate rights in a company entitles the owner of such shares or corporate rights to the enjoyment of immovable (real) property held by the company, the income from the direct use, letting, or use in any other form of such right to enjoyment may be taxed in the Contracting State in which the immovable (real) property is situated. 　　5. The provisions of paragraphs 1, 3 and 4 shall also apply to the income from immovable (real) property of an enterprise and to income from immovable (real) property used for the performance of independent personal services. 　　6. A resident of a Contracting State who is liable to tax in the other Contracting State on income from immovable (real) property situated in the other Contracting State may elect to compute the tax on such income on a net basis. In the case of the United States tax, an election to apply the preceding sentence shall be binding for the taxable year of the election and all subsequent taxable years unless the competent authority of the United States agrees to terminate the election. ARTICLE 7 Business Profits 　　1. The business profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the business profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment. However, profits derived from the sale of goods or merchandise of the same or similar kind as those sold, or from other business activities of the same or similar kind as those effected, through that permanent establishment may be considered attributable to that permanent establishment if it is established that such sales or activities were structured in a manner intended to avoid taxation in the State where the permanent establishment is situated. 　　2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the business profits which it might be expected to make if it were a distinct and independent enterprise engaged in the same or similar activities under the same or similar conditions. 　　3. In determining the business profits of a permanent establishment, there shall be allowed as deductions expenses that are incurred for the purposes of the permanent establishment, including a reasonable allocation of research and development expenses, interest, and other similar expenses and executive and general administrative expenses, whether incurred in the State in which the permanent establishment is situated or elsewhere. A Contracting State may, consistent with its law, impose limitations on deductions, so long as these limitations are consistent with the concept of net income. 　　4. Nothing in this Article shall affect the application of any law of a Contracting State relating to the determination of the tax liability of a person in cases where the information available to the competent authority of that State is inadequate to determine the profits to be attributable to a permanent establishment, provided that, on the basis of the available information, the determination of the profits of the permanent establishment is consistent with the principles stated in this Article. 　　5. No business profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 　　6. For the purposes of the Convention, the business profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary. 　　7. For the purposes of the Convention, the term "business profits" means profits derived from any trade or business. It includes, for example, profits from manufacturing, mercantile, fishing, transportation, communications or extractive activities, and from the furnishing of personal services of another person, including the furnishing by a company of the personal services of its employees. It does not include income received by an individual for his performance of personal services either as an employee or in an independent capacity. 　　8. Where business profits include items of income which are dealt with separately in other Articles of the Convention, then the provisions of those Articles shall not be affected by the provisions of this Article. 　　9. In applying paragraphs 1 and 2 of this Article, paragraph 4 of Article 10 (Dividends), paragraph 5 of Article 11 (Interest), paragraph 4 of Article 12 (Royalties), paragraph 3 of Article 13 (Capital Gains), Article 14 (Independent Personal Services) and paragraph 2 of Article 22 (Other Income), income or gain may be attributable to a permanent establishment or fixed base even if the income or gain is deferred until after such permanent establishment or fixed base has ceased to exist.