The 183-day rule for working outside the Netherlands

What is the 183-day rule?

The 183-day rule decides which country may tax your salary when you work abroad. You find it in most of the tax treaties the Netherlands has signed.¹ The main rule in those treaties is that the country where you work may tax the salary you earn there.¹ The 183-day rule is the one exception. When it applies, the country where you live keeps the right to tax that salary.¹

Three conditions have to be met together. Miss one and the work country may tax your salary.¹

Three things fall outside this rule. It does not decide where you are a tax resident. That is a separate test. Our page about tax residency in the Netherlands explains it. It also does not calculate the relief you get when two countries both tax the same income. Our page about double taxation in the Netherlands covers that. Social security is a third system, with its own rules and its own A1 certificate.

Adaeze lives in Rotterdam and works as a maintenance planner for a Dutch chemicals company. Her employer posts her to a Belgian group company in Antwerp from 1 March to 30 September. We come back to her at every step. The points below are the ones that decide her case.

Which three conditions have to be met?

The treaty sets three conditions: time, who pays and who bears the cost.¹ Adaeze’s posting has to clear every one of them.

The first condition is about time. You may not stay in the work country for more than 183 days in the period your treaty uses.¹ The second is about who pays. The employer paying your wage may not be established in the work country.¹ That employer is the company that really employs you, not just the one running your payroll. In secondment cases that means the wage is not paid by or on behalf of an employer there.¹ The third is about cost. Your wage may not be charged to the profit of a permanent establishment in the work country.¹ The same goes for a permanent representative of your employer there.¹

A permanent establishment is a fixed place of business, such as a branch or a factory. If any one of the three fails, the work country may tax the salary you earn there.¹ The table sets the three side by side.

How do you count the 183 days?

You count every day you are physically present in the work country.¹ This day count is the first of the three conditions. It covers far more than your working days.

Weekends and sick days count.¹ A part of a day counts as a full day.¹

Why you were there does not matter. The Dutch Supreme Court applies the days-of-physical-presence method from the OECD commentary.² A resident of Belgium worked fewer than 183 days in the Netherlands but stayed longer for private reasons.² His whole stay counted.² The Netherlands could tax his salary for the part of the work he did here.²

Adaeze travels home most weekends. She leaves on Friday evening and is back in Antwerp on Monday morning. Friday and Monday still count as full days. The Saturday and Sunday do not, because she is not in the work country. The table below shows which days do.

In which countries does the 183-day rule apply?

It applies under most of the tax treaties the Netherlands has signed.¹ The rule is not a Dutch invention. It is part of the treaty itself, so the other country applies the same article.¹

What differs is the period. The treaty says which period to use. That can be a calendar year, any consecutive period of twelve months or a tax year.¹ The Dutch government publishes an overview of every treaty, so you can check which one applies to your work country.¹

So Adaeze’s first question is not how many days she worked. It is which period her treaty counts them over. The box below shows why that period decides so much.

Who counts as your employer under the treaty?

The company that really directs and pays for your work can be your employer.¹ The day count is only half the answer. This is the second condition. In many secondment cases it is the one that fails.¹

That company is the so-called material employer (materiële werkgever), also called the economic employer. Adaeze’s case turns on exactly this question. The Netherlands applies the test when a foreign employer sends someone to work here.¹ If the Dutch host company really acts as the employer, the second condition fails.¹ The Netherlands may then tax from the first working day.¹ The formal employer withholds Dutch wage tax.¹ The Dutch host company stays liable if that does not happen.¹

Now turn it around. Your Dutch employer still runs your payroll. But the company you work for abroad may direct your work and carry your wage cost. The work country can then treat that company as your employer. The 183-day rule then falls away, whatever your day count says. How strictly a work country applies that test differs per country. So this is the point to check before you go.

The Netherlands applies two versions of the test.¹ The date of your treaty decides which one applies.¹ The table below sets them out. Your work country decides your case under its own rules.

How does this work out in practice?

Adaeze stays under 183 days and can still lose the exception. What happens when a posting clears the first condition but not the second? Her count is the easy part. The harder question is who her employer is.

She works at the Antwerp company from 1 March to 30 September inclusive and stays there during the week. Her posting window runs 214 calendar days, arrival and departure days included. She travels home for 38 weekend days, so her count comes to 176. The weekends she stays over and a week of leave there are all in that total.

Her posting starts and ends inside one calendar year. So she stays under 183 days whichever period a treaty uses. The first condition is met.

Then the second. The Antwerp company is a separate company, not a branch of her employer. Its manager decides how and when Adaeze works. It bears the expense and risk of her work. And her Dutch employer charges her wage cost to it per working day. All three points hold. Under the weigh-all-circumstances version the answer is the same. The third condition plays no part here. It is about a branch of her own employer. Antwerp is not one.

Belgium decides that under its own reading of the treaty. On these facts it is likely to treat the Antwerp company as her employer. If it does, the exception falls away. Belgium may then tax her salary from her first working day. The Netherlands gives relief for that part in her return. Her 176 days never came into it.

Whether that happens in your case turns on the same two questions.

What does this mean for you?

Check your days, your employer and your wage cost before the posting starts. Three things settle most cases. The sections above explain each one. Count every day you are physically present in the work country, not just your working days. Look up which period your treaty counts them over. Then check whether your employer recharges your wage cost to the site abroad.

If the exception does not apply, the relief rules decide what comes off in the Netherlands. Our double taxation guide explains how that relief works. Which return you file depends on your residency. Our tax residency guide explains how that test works. Moved to or from the Netherlands during the year? Then the M-form is your return. Do you work in Germany? Then the German compensation scheme (compensatieregeling Duitsland) may apply to you. Do you draw a benefit or a pension from abroad? Then the Belastingdienst may ask you for the worldwide income return (opgaaf wereldinkomen).

Social security is a separate system with its own rules. Your A1 certificate follows different tests. Staying under 183 days for tax says nothing about which country insures you. Our page about the A1 certificate for temporary work abroad covers that side.

This is general information, not personal advice. Your treaty, your contract and your day count decide the answer. That is what our advisor watches for.