OECD-comments on Home Office and Fixed Place of Business

Key points on remote working and PE

• A home or “other relevant place” is generally not a PE if the individual works there less than 50% of their total working time (measured over any 12month period and based on actual conduct).
• If an individual works there 50% or more, whether a PE exists depends on facts and circumstances. The main test is whether the business has a commercial reason for the individual’s physical presence in that jurisdiction.
  • Examples of commercial reasons: facilitating customer meetings, developing customers or suppliers, real-time interaction across time zones (e.g., call-centre or IT support), accessing local expertise, collaboration, onsite services, and interaction with the business’s personnel. Intermittent or incidental contacts do not generally qualify.
• Allowing homework solely to retain an employee or to cut costs (e.g. avoid office rent) is not a commercial reason. Where both commercial and non-commercial reasons are available, an assessment needs to be made on what the primary reasons are.
• The previous emphasis on whether an employer "implicitly required" an employee to work from home has been removed, providing a more practical and objective framework.
• Different rules apply where the individual is the primary person conducting the non-resident’s business (e.g. a self-employed consultant’s home may constitute a PE).

Exploration/exploitation of extractible natural resources

The commentary includes optional alternative model rules giving a lower PE threshold for exploration/exploitation of extractible natural resources (including offshore seabed activities) that may otherwise fall outside the normal fixed-place test. 

Jurisdictions adopting the model can set a bilateral time threshold (E.g. 30, 90, … days) and may extend source-country taxing rights over employment income connected to those activities.

Where a taxable permanent establishment is deemed present, profits will need to be attributed to it. The allocation of profits must be based on the arm's length principle taking into account the risks and functions of the PE and supported by appropriate Transfer Pricing documentation. This profit, plus any disallowed expenses, will be taxed in Belgium at the nominal rate of (in principle) 25%. 

Overall, the updates aim to provide clearer, more consistent guidance for treaty application in the context of cross-border remote work and resource-extraction activities. They represent a significant modernisation of the PE framework, especially in light of hybrid and remote-working trends post‑pandemic. Businesses are therefore strongly encouraged to review remote-work policies and treaty positions to assess PE exposure under the new framework.