What is the 183-day rule and how does it impact Global Mobility programs?
The ‘183-day rule’ is a common fallacy among Global Mobility professionals, which assumes that there are no tax issues as long as the individual is not present in a Host location for more than 183 days.
Why is the 183-day rule misunderstood?
The ‘183-day rule’ is not actually a rule, but an exception to the rule that tax is generally paid in the location an individual is working.
The genesis of misconception is found in bilateral income tax treaties designed to eliminate double taxation. Each treaty typically contains an article known as Dependent Personal Services (DPS), which includes a clause that limits the days in country to 183 days. These days may be counted in a calendar year, fiscal year, or rolling 12 months, depending on the treaty. The article also includes restrictions if the remuneration is paid or borne by the host country.