Which country will levy your tax depends on various things, such as where you live, what kind of income you have, your movements during the tax year, and also the particular treaties between countries. To avoid double taxation - tax being paid twice on the same income - countries have different agreements, or double taxation treaties, with each other.
The OECD model tax convention
There is a treaty which is called the OECD model tax convention. This features 32 articles for different kinds of taxation, such as employment, profits from self-employment and property. However, some countries, such as the U.S., have a couple of hundred articles. While one country might be fairly close to the OECD model, another might be very strict, while the timing of the tax years between the two countries could also be different.
You might, for instance, be living in the Netherlands where the tax year is the same as a calendar year, but have a property in the UK, where the tax year starts on April 6. The terms of the treaty between the two countries will determine which country has the right to levy tax on your income - a kind of tie-breaker if you like.
Tests
The first thing to think about is where you are a resident. This can be judged on both social and economic markers: where you go to church, perhaps, the nationality of the license plate on your car or where your children go to school, as well as, of course, the location of your employer. You should also look at the source of your income.
Property is sometimes easy. For example, the Dutch treaty with Spain states that property should be taxed in the country where it is situated. Nevertheless, you do need to declare it in the Netherlands if you are a tax resident here because it is part of your worldwide income. Fortunately, in this situation, you can apply the convention of double taxation to make deductions.
The 183-day rule
The coronavirus pandemic could have an effect on one important test: the so-called 183-day rule. This means that if you spend 183 days of one tax year in a country, it gets the right to levy taxes on your income. There are a lot of misconceptions about the 183-day rule.
Please note that you need to be resident in one country, not in both. For example, you are employed by a UK company and you are registered there. However, you were put on a project in the Netherlands, where you rented an apartment and stayed for more than 183 days in the Dutch tax year. In this situation, the Netherlands has the right to levy tax.
These things can be complex when countries have different tax years, but the double taxation treaty would normally mean that even if you had already paid some tax in the UK, you would be able to request a credit or exemption if this then had to be paid again in the Netherlands.
If in doubt, it’s always good to check with a tax expert which periods you need to take into account.
Stranded by lockdowns
Due to international lockdowns and travel restrictions, some people may have been stuck in another country this year, rather than the place where they were ordinarily resident. Again, though, there’s no rule of thumb about what this means for your taxes. The OECD has advised that workers who were effectively stranded by the lockdowns should not have these days counted as part of their official residence, but some countries do not agree with this advice. For instance, France is strict, corona or not.
The best plan is to take advice and keep good records of your own. Keep a travel calendar, count your days, record when travel restrictions started and then you can come to a conclusion about where you should be taxed.