Cross-border teleworking: new criteria for assessing a permanent establishment risk

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Paris, Strasbourg | 03.02.2026

On November 18, 2025, the OECD adopted a new version of its commentary on Article 5 of its model tax convention, marking a key milestone for the characterization of permanent establishments in teleworking situations. These commentaries are particularly important for assessing the risk of permanent establishment in France, since to our knowledge there are no tax instructions in French law specifying the criteria for qualifying a permanent establishment in the case of home office.
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Previously (2017 OECD Model), a home office created a tax risk if it was used continuously and was at the disposal of the company. The difficulty was determining in which cases the office could be considered at the disposal of the company. This framework proved unsuitable in a situation where remote working is becoming increasingly common.

The OECD now provides the following two criteria for qualifying a fixed place of business:

1. The home office (or any other relevant location) must be used on a continuous basis: the remote worker must spend at least 50% of their working time there over a 12-month period.
2. This physical presence must be motivated by a commercial reason (interactions with local customers, prospecting for local customers, access to on-site resources, etc.). A simple personal preference on the part of the employee is not sufficient.
   

However, if the 50% threshold is reached but there are no commercial reasons, other facts and circumstances may still qualify as a fixed place of business, particularly when an individual is the only person, or the main person, carrying out the business activity. A case-by-case analysis is therefore always essential.

Simplified examples cited by the OECD:

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