In November 2025, the Organisation for Economic Cooperation and Development (OECD) announced an update to the OECD Commentary on the Model Tax Convention on Income and Capital. The update aims to clarify how to determine the existence of a permanent establishment (PE) in the context of remote work. However, the text of the Model Convention itself has not been amended.
The updated Commentary to the OECD Model Tax Convention introduces a two-step approach to determining the existence of a PE.
First, it must be determined whether, over a 12-month period, an employee spends at least 50% of their working time in another country. According to the authors of the update, contractual arrangements between the employee and the employer may help establish the proportion of work performed abroad, provided they reflect the actual working pattern.
