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:
- 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
- the salary is not paid by or on behalf of a Dutch employer during that period and
- the employment costs are not borne by a Dutch permanent establishment of the foreign employer during the assignment.
The term employer
- 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.
Short stay in the Netherlands