The OECD has released an update to the Model Tax Convention on Income and on Capital, providing new and detailed guidance on short-term cross-border remote work and on the taxation of income from natural resource extraction. The update, approved by the OECD Council, aims to provide greater certainty for governments and businesses worldwide.
The 2025 Update to the OECD Model Tax Convention on Income and on Capital clarifies when remote work across borders, such as from a home office, creates a taxable presence for business. This responds to the rise in such arrangements following the COVID-19 pandemic. The update also introduces a new alternative provision setting out how income from activities connected with the extraction of natural resources such as oil, gas and minerals should be taxed, a measure that is particularly relevant for developing and other resource-endowed economies. These changes aim to enhance tax certainty and support fair and efficient cross-border business taxation.
- Remote working: Clear guidance on how cross-border "home office" arrangements are treated under tax treaties, providing certainty for employers and employees.
- Natural resources: A new alternative tax treaty provision to ensure that income from activities connected with natural resources extraction is taxed where it occurs, reinforcing source-country rights and supporting resource-endowed developing economies.
- Other improvements: Additional refinements to enhance consistency in treaty interpretation and strengthen tax certainty.
"By clarifying the rules for remote work and reinforcing source taxation for extractive industries, this update helps countries and businesses navigate a rapidly evolving global landscape," said OECD Secretary-General Mathias Cormann. "It also demonstrates the importance and continued relevance of multilateral co-operation in delivering practical solutions to modern tax challenges."
Used by governments, tax authorities, businesses, and practitioners in both OECD and non-OECD Member countries, the OECD Model Tax Convention is a cornerstone of the international tax system, helping to reduce tax obstacles and promote cross-border trade and investment. These updates reflect the realities of a global economy where remote work and digital mobility are here to stay. They also underline the importance of multilateral co-operation in addressing shared challenges and ensuring that tax systems keep pace with economic change.
The updates published today will be reflected in revised condensed and full editions of the OECD Model Tax Convention to be released in 2026. A webinar presenting the 2025 Updates will be hosted by the OECD on 10 December featuring Manal Corwin, Director of the OECD Centre for Tax Policy and Administration, alongside OECD experts.
To access the 2025 update as well as a summary of the main changes, visit https://www.oecd.org/en/publications/the-2025-update-to-the-oecd-model-tax-convention_5798080f-en.html.
