Skip to content

183 day rule – what is that?

The 183 day rule is one rule globally accepted. Apparently everybody is able to point out to this rule. But what is this rule?

183 day rule- what is that?

The 183 day rule is to prevent an employee becoming subject to taxation in multiple countries. Countries the employee is send to, to do a job, but becoming part of a foreign tax system is not what the employee applied for.

Example 183 day

You are the expert with Mercedes AMG. The trouble shooter. You are the person that knows it all. One day a Mercedes AMG in France is not working. You are send to France, spend there a week to help solving the issue. Then you are send to Spain, Switzerland, Austria, Italy etc.

If the 183 day solution would not exist, you would need to file a French, Spanish, Swiss, Austrian and Italian tax return for the time worked in those countries. If that is the consequence of your job, next time you ask to have someone else do the job in those countries.

Mercedes AMG 183 day rule example

How does the 183 day rule work?

If you are an employee, you are send abroad and the employer has no branch in that other country. Then the tax treaty with that country states that no tax over your salary is to be paid in that other country if you stay there less than 183 days.

In that Mercedes AMG example, your employer has no branch in any of the countries mentioned. You stayed about a week in France, which is less than 183 days. That implies the salary paid to you for the period spend in France is not taxed in France. The same applies for the other countries.

The employee never asked to make his life complex with all the different tax systems in all the countries he is send to. I think that is logic. Then this 183 rule helps with this logic. Doing your job in another country, should not affect your net salary due to that.

183 day incorrectly used

People that arrive after July 1 in the Netherlands, count the days. July to December 31, is less than 183 days. And they would like to leave June 30th next year, again less than 183 days.

That is not possible. The moment you move your residence to the Netherlands, you become a Dutch tax resident. Only if you stay less than 4 months, it is debatable if you ever arrived tax wise.

For the 183 an employer needs to have send you to the Netherlands, the 183 day rule cannot avoid you to become a Dutch tax resident.

All the criteria of the 183 rule need to have been met. There are three criteria, address above,  of which one is about 183 days.

183 day rule not for director

The 183 day rule is in the employee article in the tax treaty. The same tax treaty has an article for a director. The income of a director may be taxed in the country where the director activities are actually performed. In this article there is no 183 day rule taken up, hence it cannot be applied.

If you have a director title, this director articles applies to you. That implies no 183 day rule can be used, as you are not an employee. You are a director, a special employee. So special, you can influence where you do your job. That is the reason why applying the 183 day rule for a director would be silly.

Tax is Exciting

We think tax is exciting. The 183 day rule does challenge our excitement. It is in general not understood how it can be applied. Basically only days are counted, any other aspect of taxation is not taken into account. We have then the task to explain how the rule should be interpreted.

Does this post make you want to get in touch? Go for it!

Related

Box 3 adjustment is being processed

Box 3 adjustment is being processed. The news articles you read about Box 3 are now effected in your 2021 income tax assessment and what a pleasure is the outcome....
New 2023 Dutch corporate tax rates announced

New 2023 Dutch corporate tax rates announced

New 2023 Dutch corporate tax rates announced. If you ever had the idea the Netherlands is a tax heaven, this will definitely kill that idea. New 2023 Dutch corporate tax...