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HMRC internal manual

International Manual

Description of double taxation agreements: Dependent personal services (employment)

This Article deals with income from employments. Such income, derived by a resident of one country, is taxable only in that country unless they exercise their employment in the other country. If they do, then the other country can tax so much of their earnings as is derived from the exercise of their employment in that country.

Under agreements which follow the current OECD Model convention, the individual escapes taxation in the other country (that is, the country in which the employment is exercised) if they fulfil all four of the following conditions:

  • they are not a resident of the other country for the purposes of the agreement under which the claim is made for the period of the claim, and
  • they are present in the other country for a period or periods not exceeding in the aggregate 183 days in any continuous period of twelve months
  • their earnings are paid by an employer who is not a resident of that other country, and
  • their earnings are not borne by a permanent establishment or fixed base which the employer has in the other country.

A large number of older agreements vary condition (b) by calculating the 183 day period by reference to the calendar year or the fiscal year.

Income from an employment exercised on a ship or aircraft engaged in international traffic may be taxed in the country of which the enterprise operating the ship or aircraft has its place of effective management (or, in some agreements, is a resident).

The provisions of this Article do not apply to directors’ fees, to the income of entertainers and athletes, to the earnings and pensions of government employees and to pensions generally, all of which are dealt with in separate Articles.

See INTM154010 onwards for guidance regarding residence (condition (a) above).

See INTM163140 for guidance on credit for foreign tax on employment income earned abroad by United Kingdom residents.