Period present in the country from OECD model tax convention

Question

In the model OECD tax convention, which is a base for many European double taxation agreements, article 15. 2a) states a condition under which a person living in country A but working for a company based in country B doesn't have to pay taxes in country A

the recipient is present in the other State (A) for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned, and

1. How are the days counted? If I arrive on 24. February and leave on 25th, is this one or two days?
2. Should "present" be interpreted literally, eg. if I go for a short holidays away from country A, am I not "present" for purposes of this article even though I may receive salary / be registered / have a house available, etc. during this time?
3. If so, how to prove this practically, in particular in case of Schengen countries where countries don't keep exact records on when people move around? In a case of disagreement, whose responsibility is to prove the state of things (eg. I am registered in country A for 200 days, but claim I was away in country C for 20 days, do I have to prove so or does the tax authority need to prove it's not true)?

Answer 1

The model tax treaty comes with detailed commentary. The Commentary on Article 15 (https://doi.org/10.1787/mtc_cond-2017-18-en) clears up these issues: for the 183 day exemption, all days with a physical presence in that country count, including days of arrival and departure. However, that country must be the destination of the trip, merely transiting through the country to another destination does not count as presence. Similarly, there can be an exception if sickness prevents you from leaving the country. This 183 day exemption also only considers presence without residence, which matters if you work and live in one country, but then move to another country.

So the decision tree for Art 15 para 1–2 is:

• person is resident in a state
  → income from employment by default only taxable in state of residency
  • except if employment is exercised in other state
    → that income may be taxed in that other state
    • except if physical presence in other state ≤ 183 days in any 12-month period
      AND employer not resident in other state
      → only taxable in state of residency

So to summarize, the goal of Art 15(2) is to exempt short-term exercise of employment in another country from taxation in that other country if neither the employer nor employee are linked to that other country.

On the matter of burden of proof, this will depend on the local tax laws. In general, the taxpayer has burden of proof for correctly reporting their tax information. The commentary remarks: “The presence could also be relatively easily be documented by the taxpayer when evidence is required by the tax authorities.” Such proof could be collected by hotel bills, train tickets, or a driver's logbook.

Answer 2

How are the days counted? If I arrive on 24. February and leave on 25th, is this one or two days

Each country will have its own definition of “day” and how to count them. In most jurisdictions, you don’t count the “starting” day, so what you describe would be 1 day.

Should "present" be interpreted literally, eg. if I go for a short holidays away from country A, am I not "present" for purposes of this article even though I may receive salary / be registered / have a house available, etc. during this time?

Yes. You are present in the country when you are physically there.

If so, how to prove this practically, in particular in case of Schengen countries where countries don't keep exact records on when people move around? In a case of disagreement, whose responsibility is to prove the state of things (eg. I am registered in country A for 200 days, but claim I was away in country C for 20 days, do I have to prove so or does the tax authority need to prove it's not true)?

Specifics matter but in most tax matters, the onus is on the taxpayer if they want to claim an exemption or reduction from tax.