Tax Treaty Series

ITQ T-

115

December 15, 2025

Question

XCo is a large company which is resident in country X.

XCo provides emergency medical treatment for employees of corporate clients on a global basis.

Ms Y is a medical practitioner who is resident in country Y. Ms Y is employed by XCo to provide telephone and online based medical advice to employees (“patients”) of XCo’s corporate clients. She performs those activities from an office in her home in country Y. XCo decided to employ Ms Y to perform those activities due to the country Y time zone – i.e., XCo, through Ms Y and other employees based in other countries, can provide a 24/7 service to its corporate clients.

Ms Y rarely has “in-person” meetings with any of her patients – i.e., almost all interactions are via telephone and/or online.

Based on this information, does XCo have a PE in country Y under the X / Y double tax treaty (which is identical to the 2017 OECD model treaty)?

Answer

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

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

Ms Y’s activities in country Y fall within one of the examples of a “commercial reason” consideration in para. 44.17: “the real-time, or near real-time, interaction with customers or suppliers in different time zone(s) (e.g. providing call centre services, or virtual IT support or medical services)”. Therefore, Ms Y satisfies the “commercial reason” consideration in para. 44.11.

Thus, Ms Y’s home in country Y would constitute a “fixed place of business” PE for XCo under Art. 5(1) of the X / Y double tax treaty.

Do you agree?

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