For cross-border activities, most tax treaties prescribe that the country of employment is entitled to levy tax on the wage the employee earns in that country. However, there is only one exception to this rule where the country of residence is entitled to levy tax. That is if the following three conditions are simultaneously fulfilled:
- The employee does not stay in the country of employment for more than 183 days during a ‘year’.
- The remuneration is paid by or on behalf of an employer who is not a resident in the country of employment.
- The remuneration is not borne by a permanent establishment of the employer in the country of employment.
In its judgment of 14 July, 2017 the Dutch Supreme Court ruled that as days of presence in the country of employment do not only count the days the employee has actually worked there but also all other days the employee was actually present in relation to the employment (‘days of physical presence’), such as Saturdays, Sundays, National Holidays, Holidays and days off before, during or after termination of work or short breaks.