Secondments are where an employer temporarily ‘loans’ its employee to another company, the host. The consensus is that the employee will go back to the employer after completion of its agreed term with the host. The host is generally in another country, which may give rise to tax consequences in the host country for both the employee and the host.
The employee, who is a non-resident to the host country, and who renders services in that country, will be liable to pay tax in that host country unless –
- there is a Double Taxation Agreement between the host country and the employee’s resident country;
- the employee does not spend more than 183 days in the host country;
- it can be shown that the host is not the employer; and
- its actual employer does not have a permanent establishment in the host country, which is covering the costs of the employee in that host country.
Where South Africa is the host, and one of the above conditions are not met for the non-resident who is rendering services in South Africa, the South African host may be liable to account for the non-resident’s tax liability in South Africa.
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