NATIONAL LAW VS. INTERNATIONAL LAW
Some countries have the (national law) rule that you are only seen as resident in the country if you spent 183 days or more in the country in a 12 months’ period, calendar year or tax year. This rule is, when applying tax treaties, not relevant.
183-day rule in tax treaties
Most tax treaties state that the country in which the employee physically works is entitled to levy income tax on the salary related to the work. The work state however does not have the right to levy if:
The employee spends 183 days or less during a certain period in the country, and
The employee is paid by or on behalf of an employer that is not tax resident in the work country, and
The employee does not work for a permanent establishment of the employer in the work country.
- Important observations to this rule:
fulfilling any of the 3 conditions mentioned above leads to taxation rights for the work country.
- The flipside of this rule is that, if the work country does not have taxation rights, there is no option to claim a pro rata exemption on the salary in the country of residence.
- The number of days of physical presence in the work county is decisive, not the number of work days. The split of which country gets to tax which part however is made on actual work days.
The 183-day period is in some treaties measured as “in a calendar year”, in some “in a tax year” or , in newer treaties, “in any given 12 months period”.