Tax Treaty Case Law around the Globe 2015

S. 285United States: The Saving Clause, Green Card Holders and Article 19

Yariv Brauner

I. S. 286Introduction

This case, under the 1986 United States – Finland Tax Treaty deals with the effect of the saving clause typical to United States tax treaties on the taxation of lawful permanent residents of the United States (green card holders). This note focuses on the proper application of the saving clause to such persons, and the relationship between such clause and Article 4 (Residence) of the treaty, in the unique context of Article 19 (Government Service).

II. Facts of the Case

The taxpayer, Ms. Abrahamsen (or Petitioner), a Finnish citizen, came to the United States in 1983 to work for Finland’s Permanent Mission to the United Nations (the “Mission”). The Mission is Finland’s official diplomatic delegation to the United Nations. Ms. Abrahamsen entered the United States on a G-1 visa, which is issued to government officials and employees entering the United States as “non-immigrants” to work for international organizations. Only government officials and employees of recognized governments and designated international organizations i.e. the United Nations and NATO are eligible to receive a G-1 visa.

Ms. Abrahamsen was employed by the Mission in an administrative support role. She left the Mission in 1985 to work for the New York branch of a Finnish bank. While employed by the bank she held an E-1 visa, a “treaty trader” visa that also classified Ms. Abrahamsen as a “non-immigrant”. Then, in 1992 Ms. Abrahamsen obtained a lawful permanent resident status in the United States, more commonly known as a “green card.” As a condition of obtaining that status, she executed a U.S. Citizenship and Immigration Services Form I-508, Waiver of Rights, Privileges, Exemptions and Immunities, agreeing to “waive all rights, privileges, exemptions and immunities which would otherwise accrue to [her] under any law or executive order by reason of [her] occupational status.”