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The 183 days rule in tax treaties for employees working in the Netherlands

The 183 days rule

Standard rule in tax treaties is that a foreign employee pays tax on his salary in the Netherlands if the actual work is done in the Netherlands. This is different if the so called 183 days rule is applicable. This rule states that the employee will be taxed in his home country if the following conditions are satisfied:

  1. the stay in the Netherlands does not exceed 183 days (in a calendar year or a 12-month period, this differs per tax treaty) and
  2. the salary is not paid by or on behalf of a Dutch employer during that period and
  3. the employment costs are not borne by a Dutch permanent establishment of the foreign employer during the assignment.

The term employer

There can be discussion about the term employer as mentioned under 2. The Netherlands has adopted the economic employer approach in interpreting the term employer for the 183 days rule instead of the formal employer approach.
 
According to the Dutch Supreme Court the (economic) employer is the company that:

  • has the authority to instruct the assignee
  • bears the risk and expense of the duties performed, including a specific and individually traceable recharge of the employment expenses.

So if the employee is working according to the instructions of the Dutch client or the Dutch client bears all the risks and expenses then the Dutch client is seen as the economic employer and thus will the employee be taxable in the Netherlands from day 1. This means that a payroll administration will have to be set up and the formal foreign employer must be registered with the Dutch tax authorities for wage tax purposes. 
 
There is, in principle, no threshold/minimum number of days that exempts the employee from the requirements to file and pay tax in the Netherlands. An exception is made for employees of foreign companies who are assigned to the Netherlands within an international group as part of an exchange program, for career development, or on the grounds of specific expertise. They are exempt from Dutch income tax on their employment income if they work in the Netherlands for a period of no longer than 60 days in any 12-month period. The exemption does not
apply if the Netherlands has the right of taxation based on the tax treaty.
 
 
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Comments (25)
Comment by Svetlana on Wed, Oct 19th, 2016 at 9:22 PM
Hi, I moved to Holland in June due to husband job and I continue working for my Russian employer. Shall I submit Dutch tax return and pay tax from my Russian income? My Russian employer pays all taxes and social contributions in Russia. Overall I spend as resident in Holland 179 days ( also I came on vacation 3 times in the beginning of the year but as tourist). I read about 183 days rule and I can‘t understand if this apply to my case.
Comment by Arjan Enneman on Mon, Nov 7th, 2016 at 3:39 PM
From the day an employee starts working in the Netherlands a Dutch payroll administration must (in principle) be set up. If applicable the 183 days ruling can be taken into consideration. The 183 days ruling however is only applicable with respect to wage tax. To determine the number of days in the Netherlands also non work days are counted, including holidays. So in your situation you are formally more then 183 days in the Netherlands in 2016. Premiums social security have to be paid in the Netherlands from day 1. There is no social security treaty between the Netherlands and Russia which would make it possible to continue to pay premiums in Russia. So if I look at the formal rules then you have to pay tax and premiums social security in the Netherlands starting June 2016. Your Russian employer should register as foreign employer with the Dutch tax authorities so that correct amounts can be withheld from your salary. See also www.expatax.nl/payrolling.php.
Comment by Jeremy on Wed, Nov 9th, 2016 at 4:12 AM
Hi, I am a US citizen and have been on a Dutch employment agreement and paying taxes in the Netherlands since Jan 1 of this year. For a variety of reasons I have worked outside of the Netherlands for more than 183 days this year, but not in any one particular country. Since the US taxes on worldwide income, would I be able to take advantage of the 183 day ruling by paying US taxes? If so, would that mean that I am only liable for the Dutch taxes for the days I was on the ground?
Comment by Arjan Enneman on Wed, Nov 30th, 2016 at 2:08 PM
SInce you live in the Netherlands you will pay tax on your world wide income in the Netherlands. You will also have to declare your world wide income in the US since you are a US citizen. Double taxation is prevented in the tax treaty between the Netherlands and the US. You pay tax on your salary in the country where you work. If there is no payroll in the other countries you worked then everything is taxed in the Dutch payroll. An exemption for foreign work days can be claimed if you have the 30% ruling. Then only the Dutch work days are taxed in the Netherlands and all other work days in the US.
Comment by Nicholas on Tue, Dec 6th, 2016 at 12:50 PM
Hi All, I am a UK Citizen and have a Limited company in the UK. My Limited company work a UK company based in London & thats how the invoice looks. I am posted in the Netherland midweek so Arrive Monday leave Friday. I am counting that as 4 nights in the Netherlands according to the HMRC‘s ‘which country I‘m in at midnight‘ rule. Is this correct or is it days clocked into work using my sign in at the gate? If the midnight rule then I have been 174 days in the Netherlands for this year Jan-Dec, is it correct to count from Jan-Dec, I came last Nov 2015? My company have a Netherlands company but I am neither employed by them or have any knowledge of how they set up, my agreement is with the UK HQ. They are now being investigated for Tax and would like me to cooperate in the investigation but I have no dealings in the Netherlands as and far as I am aware I stay 183 days or less then I pay all taxes in the UK as normal? Help!
Comment by yudhveer sheoran on Mon, Dec 26th, 2016 at 2:05 PM
Hello! I am working for an Indian company. In netherlands, a shipyard(dutch company) is building a ship for indian owners, so they requested my company to send a person who could help them in understanding and following indian rules and regulations. I was designated for this job and the shipyard sponsored my work visa for 1 year. I arrived here on 13-Nov.2016 and an allowance to meet the local expenses is being paid by my indian company to my account in netherlands. I have following questions: 1. In year 2016, I have lived in netherlands for only 47 days, am I liable to pay taxes? also for year 2017, I will be staying here for more than 183 days, do I have to pay tax? if yes, how do I declare and pay tax? because my company is based in india and they can‘t withhold and pay my taxes here
Comment by Arjan Enneman on Tue, Jan 3rd, 2017 at 1:12 PM
@Nicholas: the tax treaty between the Netherlands and the UK states that the 183 days are calculated over a period which ends or starts in the applicable tax year. So it is not the same as a calendar year. So counting starts from your first working day in the Netherlands and then for a year. Relevant are the days in the Netherlands, the nights are not relevant. If you reach 183 days you are liable for tax in the Netherlands for the whole period. Another question is whether the Dutch tax authorities would not look thourgh your one man limited company and see the company in the Netherlands as your employer for the 183 days ruling. In that case you would already be liable for tax in the Netherlands without counting the working days.
Comment by George agnew on Wed, Feb 1st, 2017 at 1:11 PM
I am a sole trader in the UK and work under CIS with my UTR number. Recently I have been issued an A1 for me to carry out work in the Netherlands as a sole trader. I will travel to the Netherlands every week from the UK work. I will incurr all expenses on my own ..ie.. Flights, hotels and living expenses while in the Netherlands. I will provide invoices to the Dutch company from the UK and the Dutch company will pay me into my British bank account . Can I be exempt from any Dutch Taxes? As I continue to pay my income tax through CIS ( Construction Industry Scheme).. Thank you
Comment by David Nicholas Buhagiar on Mon, Feb 20th, 2017 at 5:15 PM
I work in the offshore industry. I worked 144 days through our 2016. An I entitled to claim tax back.
Comment by David Nicholas Buhagiar on Mon, Feb 20th, 2017 at 5:18 PM
I forgot to mention I live in Malta.
Comment by Pat on Mon, Jun 5th, 2017 at 7:13 PM
If i worked only 120 days in Netherlands in tax year 2016 and spent less than 183 days in Netherlands in 2016, Move back to Poland in Dec 2016 then worked for the Dutch company from Poland my home till March 2017. Should I pay tax in Poland for 2016 this time when i worked in Netherlands. Should Dutch company pay social insurance in Poland for me for Jan Feb March 2017 when i worked from home Poland for the Dutch company.
Comment by Arjan Enneman on Tue, Jun 20th, 2017 at 1:26 PM
A business pays tax in the country where it is based. A permanent location is a good indication. For a sole trader this may be the personal address. If you fly back to the UK every week you can argue that your location is in the UK. In that case you don‘t have to pay income tax in NL.
Comment by Arjan Enneman on Tue, Jun 20th, 2017 at 1:42 PM
The offshore location can be seen as a permanent establishment in the Netherlands of your employer based on which the income earned at this location is taxed in the Netherlands even if the stay was less than 183 days. See point 3.
Comment by Arjan Enneman on Tue, Jun 20th, 2017 at 1:45 PM
@Pat: during the time you worked in the Netherlands you will have to pay tax in the Netherlands since your employer was based in the Netherlands. From the time you worked in Poland you should pay tax in Poland and not in NL anymore. Social security is also paid in Poland.
Comment by Martins on Tue, Jun 27th, 2017 at 10:06 PM
The situation for me is that I have a company in Latvia and have a contract with a dutch company about freelance web development for a Dutch client. Currently I am the sole owner and the only employee. The work involves frequent trips to the Netherlands. So I was wondering what are the tax implications for this situation. From my previous experience while working as a consultant in Germany I had to make sure I don‘t spend more than 182 days in Germany in the calendar year (i.e. the days reset on January 1st), then I didn‘t have to pay double tax in Germany (as I am employed in Latvia). Is the situation similar in the Netherlands? So the questions are: 1) Is the limit for the days I spend (physically) in the Netherlands 182 days per year? And if yes what kind of proof do I need if any? 2) Do the days reset on 1 January? So for example if I don‘t spend 182 days this year, do I count from 0 again next year or is it the trailing 12 months? 3) Do I need to complete any formalities if I want to do occasional freelance work in the Netherlands (considering the previously mentioned points)?
Comment by Arjan Enneman on Thu, Aug 10th, 2017 at 6:24 PM
You are an employee of your own company. This means that the 183 days ruling in the tax treaty between Latvia and the Netherlands is applicable. The treaty states that it concerns a period of 12 months starting or ending in the tax year. It is therefor not a calender year. You will need to record the days you stay in the Netherlands related to your work in the Netherlands. All the days, including days you don‘t work but are still in NL. Plane tickets etc can support your records. If you want to remain paying social security in Latvia you will have to arrange an A1 in Latvia. Your client may want to be sure that everything is done correct. This can involve setting up a payroll administration in the Netherlands and arrange all withholdings and filings and when it turns out that the 183 days are not reached, if you are not sure yet, that withheld tax is claimed back. It also may involve registration of your foreign company with the Chamber of Commerce in the Netherlands.
Comment by Dmitrij on Sat, Aug 19th, 2017 at 4:58 PM
Hi! I have moved to Holland and register as Tax resident in Holland. I am working offshore in Africa. And I am staying in Holland less then 183 days. Should I pay a normal tax? Or there any reductions? Thanks
Comment by Dmitrij Titarenko on Sat, Aug 19th, 2017 at 8:49 PM
Hi! I have moved to Holland and register as Tax resident in Holland. I am working offshore in Africa. And I am staying in Holland less then 183 days. Should I pay a normal tax? Or there any reductions? Thanks
Comment by Elizabeth on Wed, Aug 30th, 2017 at 6:42 PM
I am Russian citizen. At the moment, live in the Netherlands based on the student visa. My 1-year study ha already finished. Now I do not have any work or study in the Netherlands. I am registered in Russia as a freelancer. I provide online services. Most of my clients are from Russia (private people + companies). Now I have a client in the US, to whom I will do online service as a contractor. The question is: to whom should I pay taxes? How will it be counted for my student visa, that only allows working 10 hours per week?
Comment by Vidal on Tue, Sep 12th, 2017 at 2:39 PM
Hi, I‘ve got a limited single-person company in Portugal, and will start working in the NL soon. If I manage to stay under 183 days in the NL will I be able to continue paying my taxes in Portugal? Thanks in Advance
Comment by Chris on Mon, Sep 25th, 2017 at 3:52 PM
Hi. I am UK citizen, that has been living in Germany, but working in The Netherlands for 7 years - I have a Dutch contract and am employed by the Dutch office of a UK company (I have a BSN etc..) - I also qualified for the 30% ruling. Recently I have been travelling more than in previous years and I am concerned that I may be outside of The Netherlands too much, to be covered by Dutch social securities and also for the 30% ruling to still be valid. Could you let me know which days are actually classed in this 183 day ruling?? By my calculations, I will probably work in The Netherlands on around 162 days in the year and will have worked about 71 days in various other countries (all in the EU). I would have spent the weekends, Public Holidays and my 25 days holiday entitlements, all outside of NL (i.e in Germany, where I live). Do my holidays and the Public Holidays get classed as "working days in NL"?? If I work below 183 days in NL, is my 30% ruling still valid? Any advice would be appreciated, so I know if I have to try to reduce my travelling time.
Comment by Arjan Enneman on Thu, Sep 28th, 2017 at 1:29 PM
@Dmitrij: if you physically work in Africa (only) then you will have to pay tax on your salary in Africa. Your employer should make the correct arrangments for you. If you are self employed you pay tax in the country where your own business is based.
Comment by Arjan Enneman on Thu, Sep 28th, 2017 at 1:31 PM
@Elizabeth: important is that you have a valid residence permit. If your visa expired question is whether you have the right to stay in the Netherlands. If you do, you will have to pay tax in the netherlands on all your income since the Netherlands is then the country where you live and also where your (freelance) business is based.
Comment by Arjan Enneman on Thu, Sep 28th, 2017 at 1:37 PM
@Vidal: you could say that your Portuguese company is sending you to the Netherlands to work here temporary for a client and thus use the 183 days ruling as described in the tax treaty between Portugal and the Netherlands. The Dutch tax authorities can also argue that based on Dutch law you are not an employee of your Portuguese company but in reality a fictitious employee of your Dutch client since you are the only employee of your company in Portugal which is not really seen as a real employer-employee relation, while the client in the Netherlands will give you instructions how and when to do your work meaning that the Dutch client more acts like your employer. It is a little bit of a grey area.
Comment by Arjan Enneman on Thu, Sep 28th, 2017 at 2:59 PM
@Chris: you mention that you work for a Dutch office of a UK company. So I assume this office is a physical presence. All Dutch work days will then already be taxed in the Netherlands even if the number of days you stay (it is stay, not work) in the Netherlands is less than 183. You are employed in the Netherlands, that‘s where the central payroll administration is done so the 30% ruling will remain applicable (on your Dutch salary). To determine whether your total salary is enough also the salary which is taxed in other countries is taken into consideration.
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