183-day rule
Taxation in a country other than your country of residence
The 183-day rule refers to taxation for people working in a country other than their country of residence. In short, it means that if you spend more than 183 days in another country for work in a 12-month period, you may become taxable in that country for your income there.
Depending on the applicable tax treaty, this period can be a calendar year, a continuous 12-month period or a tax year. To calculate the 183 days, you count all days on which the employee was in the country of work, including weekends and holidays. A half-day counts as a full day.
Some countries may have a broader definition of tax liability, which includes other factors such as where the salary is paid and the employer’s headquarters. It is therefore wise to consult specific tax rules and exceptions depending on the country concerned.
Exception 183-day rule
Exceptions include:
- The employee does not stay in the country of employment for more than 183 days within a given period.
- The employee is paid by or on behalf of an employer not established in the country of work.
- The employee does not work in a permanent establishment of the employer in the country of work. A permanent establishment is a place of business that has sufficient facilities to operate as an independent business.
Together, these 3 conditions are known as the 183-day rule. If all the conditions are not met, the working country has the right to levy tax.
Loan situations
In international loan situations, the 2nd condition of the 183-day rule is often not met. This is the case if the Dutch hirer is considered the employer. The Netherlands may then levy tax as the country of employment. As formal employer, you then have to pay wage tax from the first working day in the Netherlands. However, the Dutch user company remains liable if you fail to do so.
The Dutch user company is considered an employer (the so-called material employer) if the following 3 conditions are met:
- There is a relationship of authority between the employee and the hirer.
- The work is for the account and risk of the hirer.
- The wages are borne by the hirer. This is the case if you charge the wage costs roughly per unit of time, e.g. an amount per hour or per day.
Professional advice
For an accurate interpretation of the 183-day rule and other tax-related issues, it is always advisable to seek professional advice, this way you will avoid surprises and ensure that your tax obligations are correctly fulfilled.
AAme’s tax advisers are ready to provide you with expert, professional advice.