Applying 183-day rule in the Netherlands | KPMG Global
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Netherlands: Applying 183-day rule; physical presence method followed

Applying 183-day rule in the Netherlands

The Dutch Supreme Court (Hoge Raad) held that all days of a person’s stay in the Netherlands are to be counted for purposes of applying the “183-day rule.” The Supreme Court, thus, followed the “days of physical presence” method of the OECD Model Convention.


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For purposes of allocating the right to tax salary from employment, a 183-day rule has been included in tax treaties. If a resident of another country is employed by a foreign employer to work in the Netherlands and there is no economic employer or permanent establishment of the foreign employer in the Netherlands, then the Netherlands has the authority to tax but only if the employee spends at least 183 days in the Netherlands during a 12-month period (or calendar year, depending on the text of the treaty).

In this case, a resident of Belgium worked less than 183 days in the Netherlands. However, he also stayed in the Netherlands for personal reasons. In total, he stayed more than 183 days in the Netherlands. The question presented to the Supreme Court was how to interpret “stay” for purposes of the 183-day rule—is it limited to working days or are all the days of the stay taken into account?

Court’s decision

The Commentary to the OECD Model Convention is important for the interpretation of tax treaties in that it contains guidelines for the interpretation of tax treaties. With regard to the interpretation of “stay” for the purposes of the 183-day rule, the Supreme Court referred to the “days of physical presence” method. This means that each day (or part thereof) that an employee stays in the country of employment must be taken into account—and it does not matter whether the employee’s stay is for business or personal reasons. 

The high court concluded that the salary of the Belgian employee who worked less than 183 days in the Netherlands, but whose stay in the Netherlands totaled more than 183 days, was subject to Dutch individual (personal) income tax (if and to the extent that the activities were performed in the Netherlands). 


Read a July 2017 report prepared by the KPMG member firm in the Netherlands

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