On November 19, 2025, the OECD (Organisation for Economic Co-operation and Development) released its 2025 update to the model tax convention, a document widely used by countries to interpret double taxation treaties.
One of the most relevant sections for global employers, and especially for companies working with distributed teams, is the new guidance on how remote work can create a permanent establishment (PE).
Navigating the new OECD rules for remote worker compliance
In the 2025 update, the OECD confirms that having an employee working from home in another country does not automatically create a PE. However, tax authorities now have more precise criteria to evaluate whether a company has a taxable presence through remote workers.
Two key indicators increase the likelihood of a PE:
1. Time threshold: If an employee performs 50% or more of their work over any 12-month period from their home or regular remote-work location, the risk rises.
