salary split with van oers
Guidelines and exceptions
Whether or not a salary split is created depends on whether the specific conditions are satisfied, either deliberately or by chance. The basic rules are simple, though each has its own exceptions. The outline given below provides a general impression.
Salary split: the basic principle
In general, to be eligible for a salary split, you must actually carry out work in two or more countries. Directors of foreign companies may have split salaries without actually working in the other country. If you spend more than half your time living in the country where you work, your salary will generally be taxed there. This does not necessarily mean that your employer must have an establishment there. If you spend less time living in the country where you work, another factor that comes into play is whether your remuneration comes out of the employer’s income there. For these purposes, ‘employer’ does not mean your formal employer only: a foreign group company also qualifies as your employer in some situations.
Taxes in different countries
If your salary is split across multiple countries, they will each have rights of taxation, and your employer will have to withhold and remit tax in each of them. This may work to your advantage if you can claim exemptions and apply the lower initial rates in the progressive tax brackets in multiple countries. If the initial rate in one of the countries is higher than the average effective tax rate in your country of residence, though, on balance you will lose out. If so, you might be able to avoid the salary split or find another way to structure it.