You live in the Netherlands and you have just been asked to join the board of a company in London, Dubai or Milan. Or the other way round: you have moved abroad and you still sit on the board of your own Dutch company, flying in every few weeks. In both cases a fee arrives, and in both cases the natural assumption is that it is taxed like any other salary: where you did the work, subject to the familiar 183-day rule. That assumption is wrong more often than it is right.

Tax treaties treat directors as a category of their own, and the rules for them run in the opposite direction from those for employees. The consequences are practical and sometimes expensive: a fee can be fully taxable in a country where you never set foot, a role you thought was a directorship may not count as one, and since 2023 a board seat in a low-tax country no longer saves a Dutch resident anything. In this article we set out who counts as a director, what happens when you wear two hats, how the Netherlands relieves double taxation and where the real risks sit. Not a complete legal handbook, but a practical overview of the points that matter most in practice.

Table of contents

1. Why a director is not an employee for treaty purposes

2. Who counts as a director: the appointment, not the business card

3. Two hats: the board role and the day job

4. Splitting the remuneration, and who has to prove it

5. Living in the Netherlands, sitting on a foreign board: credit, not exemption

6. Living abroad, directing a Dutch company

7. The owner-director and the customary salary

8. The hidden risk: the company may move with you

9. Social security follows its own track

10. How to keep it manageable

1. Why a director is not an employee for treaty purposes

For ordinary employment income, treaties start from the country where the work is physically performed. The country of residence keeps the taxing right only if you work abroad for less than 183 days and the costs do not land with a local employer. That is why cross-border employees keep travel calendars: every day counts.

Directors’ fees are governed by a separate treaty provision, and it turns the logic around. Remuneration a person receives in the capacity of a member of the board may be taxed in the country where the company is resident. Where the board meetings take place is irrelevant, and so is where you prepared for them. A Dutch resident on the board of a German company is taxable in Germany on the fee even if every meeting is held by video call from a home office in Utrecht. There is no 183-day rule and no requirement that you ever enter the country.

The reasoning is that a director’s work is inherently hard to locate, so the treaty ties it to the one thing that is fixed: the company. The consequence is that the same day of work can be taxed in two completely different places depending on which hat you were wearing when you did it. That is what makes the questions in the next three sections decisive.

2. Who counts as a director: the appointment, not the business card

Under Dutch case law the term is formal. You are a director for treaty purposes if you have been appointed as a statutory board member under the company law that governs the company, and only then. The Supreme Court laid that down in 1999 and confirmed it in April 2023, in a case about a manager of companies in Brazil and Argentina who had run them in practice but had never been formally appointed to their boards. His remuneration did not fall under the directors’ article, and he could not claim the relief that goes with it.

The rule cuts both ways. A “managing director” or “CEO” title on a business card does not make you a director if the shareholders never appointed you, so the fee stays ordinary employment income and the working-day count applies. Conversely, a formal appointment brings you within the directors’ article even if the actual board role is modest and you spend most of your time on operational work.

It also matters what “director” means in the country concerned. Treaties use the company law of the company’s own country to decide who sits on its board, and some treaties widen the concept by protocol. What does not count is the underlying substance of what you do, at least not for this first question. That question is answered by the appointment decision and the trade register, nothing else.

3. Two hats: the board role and the day job

Once you are formally a director, the second question opens up: is everything you receive from the company a director’s fee? The treaty text says the article covers remuneration received in the capacity of a board member. The official commentary on the model treaty draws the line explicitly: remuneration for other functions, for example as an ordinary employee, adviser or consultant, falls under the employment article instead. A director’s status does not pull all of that person’s other income into the directors’ article. There is no attraction principle.

Dutch courts apply that distinction in practice. In June 2023 the Court of Appeal in ‘s-Hertogenbosch dealt with a Dutch owner-director who had moved to Italy and kept both his board seat and his operational job at his Dutch company. The court split the remuneration itself. It valued the board role, which consisted of approving the annual accounts and attending the shareholders’ meeting, at EUR 3,000 a year, and treated the rest as ordinary employment income. That employment income was taxable in the Netherlands only for the roughly twenty days he had actually worked here, one twelfth of the total.

That judgment is instructive for anyone in a dual role. The board component of a working director is often small, because governing a company takes far less time than running it. The rest follows the ordinary rules, which means the country where the work is physically done. For a director who lives abroad and works mostly from there, that difference is the bulk of the tax bill.

4. Splitting the remuneration, and who has to prove it

Here the practical difficulty begins. If a company pays one undivided amount to a person who is both director and employee, settled case law places the burden of proof on the director to show which part was earned in which capacity. Fail to make that split credible and the whole amount is treated as a director’s fee. Several taxpayers have lost on exactly this point: one blended remuneration, a contract that read like a director’s contract, and no visible evidence of separate work.

The paperwork decides more than people expect. In March 2023 the Court of Appeal in The Hague ruled on the wording of the employment agreement itself, and treated the entire remuneration as a director’s fee because the contract did not distinguish the roles. The Tax Administration’s own policy has said since 1990 that the label does not decide and the actual functions do, but that principle works both ways: substance can rescue a badly worded contract, and it can also condemn a well worded one that is not lived up to.

Two traps deserve a specific mention. The first is the management agreement. If your personal holding company provides services to an operating company and the agreement says the holding company is “appointed as director”, the Supreme Court held in 2004 that the entire management fee follows the directors’ article. Service agreements for operational work should describe services and nothing else. The second is the requirement that the fee is actually borne by the company concerned. A general group recharge is not enough to bring a payment within the directors’ article of a treaty, so where the money comes from and how it is invoiced matters as much as what the contract says.

5. Living in the Netherlands, sitting on a foreign board: credit, not exemption

If you live in the Netherlands, your worldwide income is taxed here and the Netherlands has to relieve double taxation on the foreign board fee. For ordinary employment income abroad the Netherlands generally uses the exemption method with progression: the foreign income is taken out, the foreign tax rate is effectively final, and a low foreign rate means a low overall burden.

For directors’ fees Dutch treaty policy has for decades preferred the credit method instead. The foreign fee stays in the Dutch tax base, and the foreign tax is deducted from the Dutch tax. The result is that you always end up paying at least Dutch rates. The reason is stated openly in the policy documents: directors’ fees are prone to being taxed nowhere, either because the company’s country does not tax work performed outside its borders or because it offers directors a favourable regime, and the credit method closes that gap.

For many years an approval softened this. A Dutch resident could still claim the exemption method for a foreign board fee, provided the fee had actually been taxed in the other country and had not enjoyed a preferential regime there. The Supreme Court applied that condition strictly in September 2013: a director who had not declared part of his remuneration in the United States, and had paid no tax on it there, could not use the exemption, and the court added that a nil valuation under foreign rules did not help either. In July 2022 the approval was withdrawn altogether with effect from 1 January 2023. Since then the credit method applies whenever the treaty prescribes it, which is most treaties. In practice that means a board seat in a country with a low or zero rate on directors’ fees no longer produces a saving for a Dutch resident: the difference is simply paid in the Netherlands.

6. Living abroad, directing a Dutch company

Turn the situation around and the same rule works in favour of the Dutch treasury. A person who lives abroad and is a statutory director of a Dutch company is taxable in the Netherlands on the director’s fee, wherever the work is done. Dutch domestic law contains a specific rule that treats the directorship of a Dutch resident company as work performed in the Netherlands, so the company must run the fee through Dutch payroll and withhold wage tax, even if the director never comes here.

What the Netherlands cannot do is tax the other hat. Remuneration for operational work that the same person performs abroad falls under the employment article and stays with the country where the work is done, as the ‘s-Hertogenbosch case in section 3 illustrates. For a director who has emigrated and keeps running the business from abroad, the composition of the remuneration therefore determines most of the outcome, and a realistic split documented in advance is worth a great deal.

Treaties do not all follow the model text. The treaty with the United Kingdom, for example, only allows the company’s country to tax a board fee insofar as it relates to services actually performed there, which brings the day count back in through the side door. Older treaties, such as the one that still applies to Bosnia and Herzegovina, define by protocol who is regarded as a director. Before assuming the standard rule, read the treaty that actually applies.

7. The owner-director and the customary salary

Owner-directors (DGAs) who hold a substantial interest in a company they work for are subject to the Dutch customary salary rule, which in 2026 sets a norm of EUR 58,000 unless a lower salary can be substantiated. A cross-border board seat creates a frequent misunderstanding here. The test applies per company. A board fee received from a foreign company does not fill the norm for the Dutch holding company, and a Dutch salary does not cover the foreign company either. Each entity in which you hold a substantial interest and for which you work is assessed on its own.

That matters because a correction under the customary salary rule is fictitious wage. It is taxed in the Netherlands in full, and since no foreign country has actually taxed that fictitious amount, there is no foreign tax to credit against it. Reducing a Dutch holding salary because a foreign board fee has appeared is therefore not a neutral rearrangement: it is a position that has to be defended with evidence about the most comparable employment, and if the defence fails the cost lands entirely in the Netherlands.

The safe route is to keep each company’s salary at or above its own norm and to let the foreign fee be what it is: additional remuneration for an additional role. The moment the two start being traded off against each other, the file needs to be considerably thicker.

8. The hidden risk: the company may move with you

The biggest risk in these situations is often not the fee at all. A company is tax resident where its effective management is exercised, and effective management is exercised by the people who take the key decisions. If a Dutch company has a single director who has moved to Dubai and runs everything from there, the question is no longer where the director’s fee is taxed but whether the company itself has quietly become a resident of the United Arab Emirates. The same applies in reverse to a foreign company run by a Dutch resident from a home office.

Modern treaties increasingly resolve dual residence of companies through a mutual agreement procedure between the two tax authorities rather than a fixed tiebreaker. Until they agree, the company is not entitled to treaty benefits at all. A dispute about a EUR 30,000 board fee can in that way escalate into a dispute about the residence of the whole company, its profits and its dividends.

The mitigation is not complicated, but it has to be real. Board decisions should be taken, and minuted, in the country where the company is meant to be resident. A second director who is resident there helps. Periodic physical presence for board meetings is worth the airfare. And the director’s contract should reflect the split between governing the company and doing the daily work, which is the same document that section 4 asks for.

9. Social security follows its own track

None of the above says anything about social security contributions, which follow entirely separate rules. Within the European Union, and under the protocol that now governs the United Kingdom, a person is insured in one country at a time, and for someone working in two countries that is generally the country of residence if a substantial part of the work is done there, otherwise the country of the employer. Outside those frameworks bilateral agreements or plain domestic law decide.

The result can be that tax on a board fee is due in one country while contributions are due in another, and that a person who owes no Dutch contributions also receives no Dutch tax credits. Where the answer is the Netherlands, the foreign company may find itself with Dutch payroll obligations for contributions even though it has no presence here. An A1 certificate before the first payment prevents most of the surprises, and it is far easier to obtain in advance than to unwind afterwards.

10. How to keep it manageable

The directors most likely to run into trouble share the same pattern: one contract, one undivided fee, no record of where decisions were taken, and a residence that changed without anyone revisiting the arrangements. The ones who do not have usually done a handful of simple things.

They have a formal appointment decision, so the first question is never in doubt. They have separate agreements for separate roles, and the service agreement for operational work describes services without a word about management or appointment. The board fee is proportionate to what the board actually does, and it is paid and invoiced by the right company. They keep a working-day log, because under several treaties the days still matter for the employment part and under some for the board fee itself. Board meetings are minuted in the right country. Each company in which they hold a substantial interest passes its own customary salary test. And where the amounts are material, they ask the Tax Administration for advance certainty on the split rather than defending it after the fact.

A cross-border board seat is a normal feature of an international career, and the rules are workable once you know that directors and employees live in different chapters of the treaty. If you are about to accept a seat abroad, or you have moved and still direct a company here, we are happy to think it through with you before the first fee is paid rather than after the first assessment arrives.