Tax Treaty Series

ITQ T-

114

December 8, 2025

Question

Ms B is an employee of ACo, which is resident in country A.

Ms B works from her home in country B for 70% of her working time in a 12-month period. She has an exclusively client-facing role and provides services to clients of ACo in country A, in country B, and in third countries. She provides those services remotely from her home in country B and she does so without physically meeting those clients. Once a quarter, she visits the premises of a client in country B to spend a day reviewing performance against the terms of the contract with ACo.

Based on this information, does Ms B’s home in country B constitute a “fixed place of business” PE for ACo under Art. 5(1) of the A/B double tax treaty (which is identical to the OECD model treaty)?

Answer

Paragraph references are to the Commentary on Art. 5 of the OECD model treaty.

The question does not indicate whether ACo is a large company with many employees, or alternatively whether Ms B is the only person (or the primary person) conducting ACo’s business.

Firstly, if ACo is a large company with many employees …

Ms B satisfies the “at least 50% of total working time” consideration in para. 44.10.

However, Ms B does not satisfy the “commercial reason” consideration in para. 44.11. Her one face-to-face meeting each quarter with a client in country B would be “intermittent or incidental”: para. 44.14.

Therefore, Ms B’s home would not constitute a “fixed place of business” PE for ACo.

Secondly, if Ms B is the only person (or the primary person) conducting ACo’s business …

The situation would fall within para. 44.20. According to that paragraph, the “at least 50% of total working time” consideration and the “commercial reason” consideration are irrelevant. Instead, because Ms B “is present for an extended period in [country B] where she carries on most of the business activities of her own consulting enterprise from an office set up in her home in that State … , that home office constitutes a place of business of [ACo].”

Do you agree?

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