OECD’s 2025 Update on Mobility Tax Rules: A Positive Step for Global Businesses

The OECD has released its first major update on mobility tax rules for remote working, specifically addressing home office permanent establishment (PE). This revised guidance is a significant development for multinational companies seeking to offer flexible working arrangements without automatically triggering PE risk. It’s a welcome move for global businesses managing cross-border teams and striving for flexibility without unexpected corporate tax exposure.

Key highlights from the updated commentary:

• Contractual location no longer decisive: Simply having a contractual work location does not determine whether a home office is “at the disposal” of the employer
• Definition of home office broadened: It may include a personal residence, temporary accommodation, or another fixed site
• Threshold for PE risk: Working from home for less than 50% of the time should not create a PE
• Beyond 50% remote work: Assessment depends on whether there is a genuine commercial reason for remote working
• Employee choice matters: A home office used voluntarily for personal reasons generally does not meet the PE test
• Employer-driven arrangements: Risk increases if the employer requires home working or controls the location
• Third-country presence: Time spent in a third country for business purposes may indicate PE, making the employee’s role and responsibilities critical
• Incidental activity: Minor or incidental business activity in the home office country does not, by itself, create PE - even if customers are located there
• Talent retention focus: Remote working arrangements aimed at attracting and retaining talent should not trigger PE

Practical actions for businesses:

• Review remote work policies: Ensure alignment with OECD guidance and clarify whether home working is voluntary or employer driven
• Track working patterns: Monitor the percentage of time employees spend working remotely in other jurisdictions
• Document commercial rationale: For employees working remotely more than 50%, maintain evidence of business reasons (e.g. talent retention, project needs)
• Assess risk for key roles: Employees with strategic or decision-making authority pose higher PE risk.
• Update compliance processes: Consider whether existing arrangements require disclosure or treaty-based protection

Why this matters

The update reduces uncertainty and supports flexible work arrangements, but facts still matter. Companies must actively manage risk to avoid unexpected tax liabilities and reporting obligations. This is a positive step toward enabling global mobility strategies without compromising tax compliance.

How we can help your business

Navigating the OECD’s updated guidance requires careful planning and documentation. Our International Tax team can help businesses align remote work policies with the latest OECD standards, conduct PE risk assessments for cross-border roles, and provide compliance support to ensure reporting obligations are met and treaty protections applied. We also offer strategic advice to develop flexible working arrangements that attract and retain talent while minimising tax exposure.

For tailored guidance or a review of your current remote work arrangements, please contact our Global Mobility Tax team here, so that we can help maximise your potential.

Click here to read the 2025 Update to the OECD Model Tax Convention in full.