Remote Work And PE: What The OECD's New Framework Clarifies, And What It Leaves Unresolved

The 2025 Update to the OECD Model Tax Convention Commentaries provides guidance on when a home or remote location can give rise to a fixed place of business PE under Article 5(1).

The scope of the 2025 Update

The 2025 Update on Article 5(1) (2025 Update) addresses permanent establishment (PE) exposures from "Cross-border working from a home or other relevant place" in Article 5(1), while making it clear that other Article 5 provisions (including dependent agent PE under Article 5(5)) must still be analysed under existing principles.

This distinction is critical. In many remote working arrangements involving sales or business development, the dependent agent analysis may present greater risk than the fixed place of business analysis in Article 5(1).