The 183 day ruling and secondment within the Recruitment industry

Most tax conventions prescribe that the state in which the employee works is entitled to levy tax on the wage the employee earns in that state. However, there is 1 exception: the state in which the employee lives is entitled to levy tax when the following 3 conditions are met:

  1. The employee does not stay in the country of work for more than 183 days during a certain period. Depending on the applicable tax convention, this period may be a calendar year, a consecutive period of 12 months or a tax year. For the calculation of the 183 days, you include all days on which the employee was in the country of work, so also weekends and holidays. Part of a day is regarded as a full day.
  2. The employee is paid by or on behalf of an employer that is not established in the Netherlands.
  3. The employee does not work in a permanent establishment of the employer in the state where the employee works.

These 3 conditions are jointly referred to as the ‘183 day rule’. If not all conditions are met, then the state where the employee works is entitled to levy tax.

Supply situations within the Recruitment industry

Many international supply situations do not meet the 2nd condition of the 183 day rule.

This is the case when the Dutch recipient (the client of the foreign recruitment company) is deemed to be the employer: the Netherlands may then, as the state in which the employee works, levy tax. The recruitment company, as the formal employer, will then need to pay wage tax from the employee’s 1st day of work in the Netherlands.

However, the Dutch recipient will remain liable if you fail to do so. (recipients liability / chain law)

The Dutch recipient is deemed to be the employer (what is referred to as the ‘material employer’) when the following 3 conditions are met:

  1. There is a relationship of authority between the employee and the recipient.
  2. The work is carried out at the recipient’s expense and risk.
  3. The wage costs are charged to the recipient. The invoice must also show how many employees you have supplied.

More information?

At AAme we passionate believe that all legislation and regulations should be more accessible and understandable for all people and companies. We believe that doing business in whatever country should be the same as doing business in your own back-yard.

We create simple cost-effective solutions for the long-term and at a fair remuneration.

Like Einstein said:

if you can’t explain it simple, you don’t understand it well enough.

All AAme advisors are bonded by strong quality guidelines; determined to exceed technical and ethical standards and convinced that passion for accountancy and tax, rigour in the way they perform their job on a daily basis and open-mindedness are the keys to success.

Would you like to know more about international employment? AAme Adviseurs has in-house expertise for tax and legal support for employers and expats. Please contact Dennis van den Bos / Danyo Basiran for tax issues or Laura Zuydgeest / Michael Dreessen for legal issues.

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