The 183-day rule applies only after immigrating to the United States

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If a Dutch person immigrates to the United States, he cannot implement the 183-day plan with respect to wages he received as a resident of the Netherlands.

In 2018, one has lived in the Netherlands from 1 January to 17 June. He earns a salary of €26,118 during that period. On June 17, 2018, he moved from the Netherlands to the United States (US). For the period from June 17, 2018 to December 31, 2018, he receives a salary of €67,436 from a US company. The Dutch tax authorities want to levy €26,118 on wages. But man takes it from the tax treaty between the Netherlands and the United States that the Netherlands has no right to tax. His justification is that he has worked and lived in the US for more than 182 days. He claims to have declared all of his worldwide income in the US.

Dutch wages received as a resident of the Netherlands

However, the District Court of Gelderland ruled that the 183-day rule applies to employees who receive income from one country and are resident in another country at the time. Hence the time when an employee submits his income tax return is irrelevant. The person received a salary of €26,118 during the period he was resident in the Netherlands. Therefore, he cannot call the agreement. Incidentally, the man did not believe that the US tax authorities had taxed the Dutch income. He also contends that the Tax and Customs Administration wrongly refused to deduct the medical expenses. But he also does not believe that he incurred these expenses before his migration. The court declares the person’s appeal groundless.

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Agreement: Art. 16, second paragraph of the NL-US Treaty

Act: Art. 2.1, first paragraph, part A And 7.8 Income Tax Act 2001

Source: District Court of Gelderland 14 February 2023 (published 21 February 2023), ECLI:NL:RBGEL:2023:703, AWB 21/650

In-depth course International Aspects of Payroll Tax

Payroll tax expert Hans de Vries zooms in on the international aspects of payroll taxes. These include tax liability of non-resident employees in the Netherlands, liability for employers not established in the Netherlands, international social security, international aspects of the work-related expenditure scheme and the 30% relief. Practical issues that play a role in payroll administration for cross-border employees are also discussed, and attention is paid to salary segregation.

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