Article 15 OECD -Model Convention: new circular
Article 15 of the OECD Model Convention provides for an exception, namely when an employee works in another state than his state of residence, he still pays tax in the state of residence.
There are three conditions for this exception to apply, and they have to be satisfied simultaneously.
The first condition is the 183 day rule. The time spent in the state of work can not exceed 183 days during any 12 month period or 183 days during any 12 month period that commences or ends in the tax year concerned.
The second condition concerns the fact that the remuneration of an employee is not paid by or on behalf of an employer who is a resident of the state where the work is done. If the two other conditions are fulfilled, the state of residence will retain the right of taxation.
The third condition states that when the remuneration relating to the work done abroad is not borne by a permanent establishment or a fixed base of the employer (the employer is no resident of the state where the work is done) in that state. If the remuneration is borne by such a permanent establishment, it will be taxable in the state where the work is done, even if the period of work abroad does not exceed 183 days.
For more detailed and elaborated information on this topic, please take a look at the article in Expat News of October 2005.
SOURCE: Expat News 13 October 2005, n. 9, p. 1-6
