Double taxation agreements and employment taxes

Produced by Tolley in association with Gill Salmons
Double taxation agreements and employment taxes

The following Employment Tax guidance note Produced by Tolley in association with Gill Salmons provides comprehensive and up to date tax information covering:

  • Double taxation agreements and employment taxes
  • Introduction
  • Treaty Article 4
  • The employment income Article
  • Common mistakes ― day counting rules
  • Common mistakes ― recharging costs of employment
  • Short-term business visitors (STBV) and PAYE
  • Tax equalisation arrangements
  • Exceptions ― when there is no double tax treaty
  • Economic employer
  • More...

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant tax changes associated with Brexit began to take effect. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit ― personal and employment tax implications guidance note.


In some circumstances, an individual may be liable to tax in two jurisdictions simultaneously where he is employed in one country but spends time working in another. A double tax treaty between countries can be relied upon in many cross-border situations to exempt an income source from taxation in a particular country. However, double tax treaties are notall identical and care should be taken in determining how treaty provisions may apply to individual employees.

This guidance note covers double tax treaties as they apply to employment income, but it does notcover international social security agreements (for which, see the Social security agreements guidance note).

Treaties are generally set out in a standard format with the same article number addressing the same issue in every treaty. In order to ascertain the employment tax position for an individual employed in one country but spending periods working abroad, Article 4 and the ‘income from employment’ Article of the applicable treaty are the most relevant.

Treaty Article 4

The residence Article of a double tax treaty is usually Article 4, which deals with an individual working outside the country in which he is deemed to be resident for the purposes of the treaty provisions (treaty resident). It is possible to be resident under domestic legislation in multiple countries at the same time, and Article 4 helps to establish which of the two countries covered by the Treaty will have the primary taxing rights over certain types of income ― namely, which country is allowed

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