New OECD commentary on permanent establishment when working from home

The new OECD commentary that was published on 19 November 2025 clarifies when the home of an employee can be deemed as a "place of business" for the company and therefore qualifies as a permanent establishment. If an employee spends less than 50% of their working hours at home then, as a rule, it would not be considered a permanent establishment. However, if an employee works from home for at least 50% of the time during a period of 12 months, a further assessment of the facts and circumstances will be necessary. A commercial reason for working from home in a country other than where the employer is based, such as direct customer contact, will weigh heavily in such an assessment. The OECD provides five examples to support this assessment in practice.

The commentary also introduces an optional lower threshold for permanent establishments involved in offshore exploration and the exploitation of natural resources. This could be beneficial in source countries.

Impact on Dutch tax treaties

The Supreme Court in the Netherlands confirmed in 2022 that the OECD commentary is important for interpretation purposes, but that changes published after a treaty has been concluded ("posterior commentary") do not have the same weight. A distinction has to be made between clarifications of existing rules which may be relevant and material changes which, in principle, are left aside. These "material" changes will only be taken into consideration if the tax treaty in question is signed after the publication of the (revised) OECD commentary. Or if a tax treaty stipulates that it is to be interpreted in accordance with the OECD commentary at the time when the treaty is applied, as in the case of the new (still to be ratified) treaty with Belgium. In practice it is not always easy to distinguish between a clarification and a ‘material’ change, so assessment has to be made on a case-by-case basis.