Arbejdsudleje / International hiring-out of labor

Peter Olsen

Student thesis: Master thesis


This thesis examines the concept of international hiring-out of labor. In hiring-out of labor cases, the recipient formally meets the criteria set out in article 15 in the OECD Model Tax Convention and is therefore in not taxable in the other state in because the resident is not under employment of an employer in the other state. In this case various legislative or jurisprudential rules and criteria have been developed for the purpose of distinguishing cases where services rendered by an individual to an enterprise should be considered to be rendered in an employment relationship from cases where such services should be considered to be rendered under a contract for the provision of services between two separate enterprises. In 2010 OECD amended the commentaries on article 15 point 8-8.28, which subsequently led to an amendment of domestic Danish tax law. The changes introduced some new concepts and criteria. It follows that the nature of the services rendered by an individual will be an important factor and it will be important to determine whether the services rendered by the individual constitute an integral part of the business of the enterprise to which these services are provided. The distinction is based on substance over form and domestic tax law may, subject to some limits, ignore the way in which the services are characterized in a formal in the contracts. This thesis examines Danish domestic tax law and its compatibility with the guidelines in the commentaries to the OECD Model Tax Convention. Domestic Danish tax law seems to follow these principles. I am focusing on the guidance from the Danish tax authority to deduce the law and analyze the different criteria and instructions to determine the relevance of different factors. In this regard, it seems as if the Danish tax authority focuses on the nature of the services to determine if the employment relationship is different from the formal contractual relationship. This is especially the case when assessing which enterprise bears the responsibility or risk for the results produced by the individuals work and in regard to who has the authority to instruct the individual. The thesis also shortly determines the consequences when the situation should be considered international hiring-out of labor and examines shortly the importance of double taxation conventions – especially when these conventions were conducted befor the amendments to the OECD guidelines and domestic tax.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2015
Number of pages86