A Netherlands television production company had concluded a contract with the personal company of a TV game show hostess. The contract was concluded in 1997, and had an effective period from 1 September 1997 until 31 August 2000. The remuneration amounted to NLG 500,000 (EUR 226,890) per year, and the company would arrange for the services of the TV hostess. Per 1 November 1998 the hostess and her company emigrated from the Netherlands to Mexico. During 1999 the hostess hosted a number of game shows in the Netherlands. In total she worked 9 days in the Netherlands, and had undertaken certain preparatory activities in Mexico.

In 2000 the Netherlands tax authorities took the position that the hostess was – despite the interposition of her company – in fact an employee of the television production company. In August 2000 the company of the hostess and the television production company agreed to end the cooperation. In 2000 the production company paid an amount of NLG 627,778 (EUR 284,873) to the company of the hostess. By the end of 2001 the Netherlands tax administration imposed an 1999 and a 2000 income tax assessment on the hostess, for 1999 taking into account a taxable income of NLG 500,000 and for 2000 NLG 624,240.

The taxpayer went into appeal. The Court of Appeal of Amsterdam held that both parties held that Article 15(1) of the tax treaty concluded between Mexico and the Netherlands was applicable. The Court investigated how much of the payments were to be attributed to the execution of the employment in the Netherlands. It concluded that for 1999 an amount of NLG 22,085 and for 2000 an amount of NLG 14,771 was taxable in the Netherlands.

The tax authorities went into appeal against these decisions. Before the Supreme Court will decide, one of the Advocate-General?s to the Court prepared a Conclusion (Conclusions regarding cases Nrs. 41.242 and 41.243, dated 29 December 2005). Although none of the parties had raised the argument, the A-G took the position that the parties and the Court of Appeal of Amsterdam had erroneously held that only Article 15 of the tax treaty was applicable. The A-G held that also application of Article 17 of the treaty needs to be considered, and that since the 1999 activities of the hostess were entirely focused on the Netherlands the entire remuneration was after application of Article 17 of the treaty subject to Netherlands income tax. For 2000 the A-G held that it needs to be established whether some or all of the prepared pilot game shows were indeed broadcasted. If not, the A-G held that Article 15 is applicable. If these pilots have been broadcasted, it needs to be determined which part of the remuneration should be attributed thereto. That part would then be taxable in the Netherlands.

The decision of the Supreme Court is to be awaited.