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The Independent Personal Services Exemption

If a tax treaty exists between the U.S. and the artist’s country of residence, and the treaty does not include a provision concerning artists or entertainers specifically, then the treaty’s article on “Independent Personal Services” applies if the foreign artist is an independent contractor.  Generally, under this article, income paid to an artist performing services in the U.S. as an independent contractor is not taxable in the U.S. if certain conditions apply – these conditions vary from treaty to treaty.  The conditions sometimes include a requirement that the artist not have a “fixed base” in the U.S., or that the artist have limited presence in the U.S. during the tax year.  Some treaties also impose a cap on non-taxable earnings within a tax year.  As with the other exemptions, it is imperative to examine the specific treaty and provisions that apply to a particular artist to determine if the foreign artist’s income is subject to taxation and thus, also subject to withholding!