OECD approved amendments to Model Tax Convention and Commentaries

On 18 November 2025, the OECD Council approved the 2025 Update to the OECD Model Tax Convention (the “2025 Update”). The update provides for very limited changes to the text of the Model Tax Convention itself, clarifying the operation of the General Agreement on Trade in Services in certain Mutual Agreement Procedure situations under the convention.

However, it also includes a number of changes to the Commentaries that may affect taxpayers with cross-border exposure. In particular, the 2025 Update:

• provides updated guidance on the recognition of “home permanent establishments.” It clarifies criteria for the permanence of the place, determining it to be a place of business, and analysing the commercial reason for the existence of such place of business;
• establishes an alternative (optional) provision on activities in connection with the exploration and exploitation of extractible natural resources, together with related commentary. The provision aims to capture as a permanent establishment the operation of offshore exploration and exploitation businesses in a wider array of circumstances;
• clarifies that domestic deductibility restrictions, such as thin capitalisation and earnings stripping rules, are not dealt with under Article 9 of the Model Tax Convention; and
• expressly indicates that information received through exchange of information can be used for tax matters concerning persons other than those in respect of whom the information was initially received.

Tax authorities are likely to refer to the updated text of the Model Tax Convention for interpretation of existing tax treaties.

Additional notes

If you need more information on how these changes could affect your business, operations, or tax positions, please reach out to partner Vadim Medvedev.