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HMRC internal manual

Double Taxation Relief Manual

Norway: hired out employees

Paragraph 3 of Article 14 deals with `hired out’ employees, that is an employee whose services are hired out by his employer to another employer who effectively directs and controls the activities of the employee; the first employer having no responsibility for carrying out the work on which the employee is engaged. The paragraph denies the employee any exemption from tax he might otherwise have obtained under Article 14(2).

The provisions of Article 14(3) are designed to make it explicit that the relief provided by Article 14(2) will not be available in circumstances where an individual is effectively working on behalf of a company or organisation in the country where he is carrying out his duties, but has arranged an employment through a company or organisation located in the other country, perhaps with the intention of utilising the exemption in Article 14(2) or avoiding other provisions relating to taxation, social security contributions or employment applicable in the country in question to resident but not non-resident employers. Thus, if a resident of Norway is employed by a Norwegian resident employer who hires out his services to another employer who controls the exercise of the employment in the United Kingdom, he will be liable to United Kingdom tax on the remuneration he gets from the exercise of his employment in this country even if he fulfils all three conditions (a), (b) and (c) of Article 14(2).