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HMRC internal manual

Double Taxation Relief Manual

HM Revenue & Customs
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Double Taxation Relief Manual: Guidance by country: Denmark: Hired out employees

‘Hired out’ employees are those 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. Article 15(3) of the agreement, which was introduced by the 1991 amending agreement (DT5901), denies the employee any exemption from tax in the country in which he is working he might otherwise have obtained under Article 15(2) (DT1920).

The provisions of Article 15(3) are designed to prevent the exploitation of the relief contained in Article 15(2) 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 15(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 Denmark is employed by a Danish 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 15(2).