What Is Changing in International Corporate Taxation?
On September 30, 2026, the OECD published the complete 2025 edition of the Model Tax Convention on Income and on Capital, the eleventh edition of one of the main international references for negotiating, applying and interpreting bilateral tax treaties aimed at preventing double taxation.
The publication reflects the Model as it stood on November 18, 2025, and incorporates the changes approved by the OECD Council on that date. The complete document includes the articles and their commentaries, the positions of non-member economies, the recommendation of the Council, historical notes and background reports.
Permanent establishments and international remote working
One of the most significant developments is the revision of the commentary on Article 5, concerning permanent establishments, to clarify the circumstances in which work carried out by an individual from their home or another location may constitute a fixed place of business for a company.
These clarifications respond to the widespread adoption of remote and cross-border working arrangements and aim to provide greater certainty when determining whether an employee's use of a home or other space may create a taxable presence for their employer in another country.
The assessment must take into account the specific circumstances, meaning that working from another country does not, in itself, establish the existence of a permanent establishment.
New tax criteria for the extractive sector
The commentary on Article 5 also introduces an optional alternative provision for activities involving the exploration and exploitation of extractable natural resources.
This alternative establishes a shorter time threshold for determining the existence of a permanent establishment, with the applicable period to be agreed bilaterally between the contracting states.
Its practical relevance lies in international projects and activities in the extractive sector, where the duration of a company's presence in a particular territory may be decisive for the taxation of business profits. As this is an alternative provision, its application will depend on whether the contracting states incorporate it into the relevant treaty.
Developments in transfer pricing and intragroup financing
The update also affects Article 9, concerning associated enterprises, and the commentaries on Articles 7 and 24.
The amendments clarify the interaction between the arm's length principle and certain domestic rules limiting the deductibility of financial expenses, in connection with the OECD's work on transfer pricing aspects of financial transactions and the recommendations of Action 4 of the BEPS project.
For multinational groups, these changes highlight the importance of reviewing intragroup financing, debt policies and transfer pricing adjustments, bearing in mind that the application of treaty provisions must be coordinated with the relevant domestic legislation.
Dispute resolution and elimination of double taxation
Regarding tax dispute resolution, Article 25 and its commentary have been amended, including a new paragraph 6 confirming the role of competent authorities in determining whether a matter falls within the scope of a tax treaty for the purposes of the dispute settlement mechanisms provided for in the General Agreement on Trade in Services.
In addition, the commentaries include references to provisions on legal certainty and the elimination of double taxation linked to Amount B, while preserving flexibility for jurisdictions that have not adopted this approach.
Exchange of tax information between countries
Finally, the commentary on Article 26, concerning the exchange of tax information, has been updated to clarify that information received may be used in tax matters involving persons other than those to whom the information originally related. It also provides guidance on taxpayers' access to exchanged information and the disclosure of information derived from it that does not specifically identify other taxpayers.
The edition also reflects changes to the observations and reservations of member countries and the positions of non-member economies.
Application of the OECD Model Tax Convention
The OECD Model does not replace existing bilateral tax treaties, nor does it have the binding force of a treaty in its own right. Its practical value lies in serving as a reference for treaty negotiations and as an interpretative tool, taking into account the actual wording of the relevant treaty, the positions of the contracting states and the rules applicable in each case.
Therefore, the 2025 amendments should not automatically be applied to all existing treaties. It is necessary to verify whether the specific treaty includes the relevant provision, whether there are significant differences and whether it has been modified by the Multilateral Instrument or another subsequent agreement.
Tax implications for companies with international operations
For companies engaged in cross-border activities, it is advisable to prioritise a review of international remote working arrangements, functions performed from abroad, projects in the extractive sector, intragroup financing and dispute resolution procedures.
The analysis should be carried out on a treaty-by-treaty basis, alongside the applicable domestic legislation, to determine whether the new guidance affects the tax risk assessment or warrants updates to the group's policies and documentation.
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