On Wednesday 19 November, the OECD published an update to the model tax convention on income and capital. This model provides new and detailed guidance on short-term cross-border remote work and the taxation of income from the extraction of natural resources.
This update aims to provide greater legal certainty for governments and businesses. It specifies that, in cases of cross-border remote work, such as from a home office, this creates a taxable presence for companies. It clarifies the circumstances in which a natural person’s home could constitute a “place of business”, to take account of the boom in these working arrangements generated by the Covid-19 pandemic.
The new convention also introduces a new alternative provision for taxing income from activities related to the extraction of natural resources such as oil, gas and minerals. The central element of this provision is a lower permanent establishment threshold, which would be crossed after a non-resident enterprise has carried on business in a State beyond a bilaterally agreed period. This measure is of particular interest to developing and other resource-rich economies.
“It also demonstrates the importance and continued relevance of multilateral co-operation in delivering practical solutions to modern tax challenges,” commented OECD Secretary-General Mathias Cormann.
Further information: https://aeur.eu/f/jl1 (Original version in French by Anne Damiani)