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183 day rule and tax – court case

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The 183 day rule is a rule apparently everybody knows. Then again, a rule randomly applied from which it becomes clear nobody understands the rule. Other than 183 days and possible disappearance of Dutch tax claim.

The 183 day rule and tax

The 183 day rule and tax is for some reason the most well-known rule in our tax system. The rule is very creatively calculated, with or without weekend days.

What is the 183 day rule?

The 183 day rule is a convenience to avoid an employee becomes subject to tax, simply for having worked a few days in the other country.

Example. You are the trouble shooter of Tesla software. Tesla has cars all over the world and you are the best trouble shooter. Hence Tesla sends you for a week to Thailand, two weeks to France and a week to Germany. But you live and work in the Netherlands.

If there would not have been a 183 day rule, the week you worked in Thailand is subject to Thai tax, two weeks in France subject to French tax and the week in Germany subject to German tax. The next time you are asked to go abroad, you reply to find somebody else. Tax is exciting, but not that exciting!

The rule makes that the one week in Thailand, two weeks in France and the week in Germany does not make the employee subject to local tax.

In other words, the 183 day rule is to prevent you becoming subject to tax in the country your employer sends you to for a few days to work.

What are the conditions of the 183 day rule?

The conditions are that you cannot have stayed more than 183 days in the country to which your employer has send you. This other country is not the country in which you are already living. And the employer cannot have a branch or related company in that other country.

Going to court
183 day rule and tax

Court case

A Dutch resident, living and working in the Netherlands in 2018, claimed the 183 day rule. He moved June 26 2018 to the USA, hence he calculated being less than 183 days in the Netherlands. That implied the 183 day rule should be applied.

The tax office denied this claim. The high court denied the claim.

If you are living and working in the Netherlands, you are a Dutch resident tax payer based on facts and circumstances. No 183 day rule will change that, certainly not a 183 day claim that does not meet the requirements.

Moreover, the USA tax return he filed clearly stated he was living till June 26, 2018 in the Netherlands.

The argument was over EUR 26.118 taxable salary for that period. He went to court and used according to the court case EY as advisor. The tax in relation to the costs made for the lost court case, are in no comparison.

Tax is exciting

We think tax is exciting. That is not the same as paying tax being exciting. If we can help you prevent paying tax, we are the first to update you. The 183 day rule does exists, but the number of situations over a 30 years period that qualified are to be counted on one hand by us.

The rule has three conditions, all to be met. Hence is more than counting 183 days. Then your employer is in charge to process this correctly. This rule is not actually to be processed in the income tax return.

Finally, you need to understand the full picture of your tax status. Then you can understand why the 183 day rule probably does not apply to you. I think in the above court case the experts tried to explain the situation, but that the tax payer disregarded good tax advice and consequently lost.

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