UK and International Tax news
OECD Publishes Update To Model Tax Convention
Friday 21st November 2025
The OECD has released an update to the OECD Model Tax Convention on Income and on Capital.
The update, approved by the OECD Council, provides new and detailed guidance on short-term cross-border remote work and on the taxation of income from natural resource extraction.
The 2025 Update to the Model Tax Convention clarifies when remote work across borders, such as from a home office, creates a taxable presence for business. In particular, clear guidance is given on how cross-border “home office” arrangements are treated under tax treaties, providing certainty for employers and employees. 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. The new alternative tax treaty provision is designed 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 have been made to enhance consistency in treaty interpretation and strengthen tax certainty.
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. The latest 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 will be reflected in changes to and commentaries on Articles 5, 7, 9, 24, 25 and 26 and included in revised condensed and full editions of the OECD Model Tax Convention to be released in 2026.
If you would like more detail on the above, please contact Keith Rushen on 0207 486 2378.
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