183 day rule

Do you work abroad for part of the year while living in the Netherlands? The 183-day rule prevents you from paying tax on your salary in two countries and determines in which country your salary should be taxed. Would you like to know where your income will be taxed in order to prevent and/or anticipate any tax problems? Please contact us to discuss your situation.

When is the 183 rule relevant?

Most tax treaties with other countries stipulate that the country of employment may levy on the salary. However, part of these tax treaties is the 183-day rule. If applicable, the country of residence may levy tax. This applies if 3 conditions are met:

  • the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned; and
  • the remuneration/ compensation is paid by, or on behalf of, an employer who is not a resident of the other State; and
  • the remuneration/ compensation is not borne by a permanent establishment which the employer has in the other State.

If this is the case, the salary is not taxable in the state of employment until more than 183 days have been spent there. If not, the entire salary is taxed in the country of residence.

Often the article in the tax treaty that includes the 183-day rule is misunderstood or misapplied.

Salary in the country of residence remains taxable

Incidentally, days worked in the state of residence or even a third country, are in any case taxable in the state of residence. This is often overlooked. If you live in a particular country, there is a resident tax liability there. Worldwide income and assets must then be stated in the tax return in that country. Subsequently, on the basis of the 183-day rule, a conclusion is arrived at for which part double taxation deduction can be requested.

Keep track of working days

In the context of the 183-day scheme, it is very important to keep a good record of where you spend each day during the year. A calendar specifying this is an important thing an inspector will request in employment with more than one working country.

Examples of 183 day rule situations

With the 183-day rule, small nuances in situations can already lead to different outcomes whether or not the scheme is applicable. As a rule, you cannot simply apply the following example situations to your situation.

You are considering an employment offer from a Dutch company. Although you will be earning a salary from the Netherlands, you will still continue residing in Portugal and mostly working from there. Your new job would also involve frequent travelling to other countries worldwide. Consequently you expect not to be visiting the Netherlands for work (meetings etc.) for more than 183 days per year. You are wondering if you will need to pay taxes in the Netherlands anyway.

If you are on a Dutch pay roll and due to your domicile you are only taxable for days physically worked in NL. Any other days are taxable in Portugal. You will also need exemption in NL for social security contributions and health insurance as it seems to me these will continue in Portugal. It is possible to correct this afterwards via a tax return. But possibly your future NL employer has an idee how to address this issue. Being on a Dutch pay roll is not strictly necessary however. The NL company can probably run a Portuguese pay roll either through their NL company (if possible under Portuguese rule) or via an own to be established entity in Portugal or a third party pay roll. We would be happy to give you some further advice.

Last year you’ve worked for 9 months in the Netherlands, for a Spanish company. You paid taxes in Spain, but at the end of the year, in December, the Spanish company returned the taxes to you and told you that you had to pay taxes in Netherlands because you had exceeded the 183 day period. You are a Bulgarian national, with permanent residence in Bulgaria, and are working abroad as an electrical supervisor on different projects for your Spanish employer.

In principle, it is correct that tax is due in NL as well as social security contributions if you lived and worked here and if you did not live here but worked more than 183 days. Also important are the following questions: was there no fixed establishment of the employer in NL? Did you have Dutch health insurance? Did you register as living in NL? Have you received any correspondence from the tax office? We will be glad to help.

You are an expat in the Netherlands since 2018 and now started working in Germany for your Dutch employer in January 2021. You are working in Germany for 14 days and 7 days in the Netherlands on a monthly basis. You are paying wages tax and social security and health insurance contributions in the Netherlands and you also receive mortgage interest deduction and childcare allowance here. However, you will be working over 183 days per year in Germany and are concerned about the tax consequences this has for your situation.

If you are physically present in Germany for more than 183 days during a 12-month period, Germany is entitled to levy on the salary earned there. In that case, the Netherlands must grant double taxation deduction. This may affect the mortgage relief refund that you receive. The social security contributions however remain due in the Netherlands because you also work more than 25% of your time in the Netherlands. It is consequently needed to submit both a Dutch and German tax return to make sure taxes are paid correctly. It may also be necessary to apply for an A1 statement to confirm social security contributions are due in The Netherlands.

You lived and worked in NL as an ex-pat. Beginning of this year you started working in Tanzania for a Tanzanian employer. The work schedule is 2 months in Tanzania and 1 month in the NL (plus holidays). You did not deregister from the Netherlands as your house and partner remain in NL. You would like to avoid being taxed on your salary in NL after being taxed already in Tanzania. And therefore if you need to watch out for the 183 days stay in NL to ensure your total stay remains less than that.

If you only work in Tanzania tax consequences should be minimal. If you however work remotely from NL for your Tanzanian employer there will indeed be tax consequences. We will be glad to look into further detail. Is your Dutch health insurance no longer active since your work in Tanzania?

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As an expat and business owner, my income taxes can get pretty complicated. But thanks to the folks at J.C. Suurmond & zn., I don’t have to worry about getting things wrong or forgetting obscure tax rules. It’s great to feel like I have someone on my side dealing with the Dutch tax authorities. They’ve handled my taxes for years, and I hope they will for years to come. Thanks 🙏🏼”

– Brian Pagán-

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“Work in the US, through secondment by a Dutch research institute. Sander was able to advise me on avoiding double taxation and other tricky questions, and help with filing taxes in NL during the last two tax seasons. Professional and prompt responses, can certainly recommend!”

– Roelof Smit –

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Who are Suurmond Tax Consultants

Since 1986 expat and business tax advice in relation to the Netherlands is one of our areas if expertise we provide to our individual and/ or business clients.

In addition, we can also assist in a variety of other cross-border situations. We will ensure you are compliant as well and that you pay no more tax than needed. Examples include advising clients as to starting a business in The Netherlands, accounting, property tax, and amnesty ruling. We file all types of  tax returns and specialise for example in the 30% ruling and 183-days rule consequences. The value we can add with our fiscal advice, is a key focus point to us. Also, what should not be overlooked, is the fact that a correct tax return will prevent future issues and penalties. This is essential when moving to a new country, or when setting up a business in a new country. 

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J.C. Suurmond & zn. Tax Consultants
Zwarte Zee 100
3144 DE Maassluis
T: +31 (0)10-3033701
E: taxadvice@jcsuurmond.nl

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VAT: NL 8016.36.668.B.01

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