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ARTICLE · 03 SEPTEMBER 2026

Employees Working From Home And Permanent Establishment

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A new Dutch policy decree clarifies when remote working arrangements may create a permanent establishment for foreign employers, following recent amendments to the OECD Model Tax Convention. The guidance establishes a 50% threshold test and introduces case-by-case assessment criteria that could significantly impact cross-border employment taxation and corporate tax liability for businesses with remote workers.

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Linda van de Reep
Linda van de Reep
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A new policy decree on the application of international tax law in relation to business profits has recently been published. The 25-page document addresses the Dutch application of provisions from tax treaties and Dutch tax legislation. One of the topics covered in the decree concerns remote working and permanent establishments.

Employees who work from home for a foreign employer may unintentionally create a taxable presence, or permanent establishment, for that employer in the country where they reside. The policy decree discusses this issue in more detail, partly in response to the amendment of the OECD Model Tax Convention of 19 November 2025.

The OECD Model Tax Convention and the accompanying commentary clarify when a home office may constitute a permanent establishment of a foreign employer. As a general rule:

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