Amendment

Explanation

Home office at the disposal of the enterprise

The 2025 update removes the older, narrower home-office text (former paragraphs 18–19) and replaces it with a dedicated section (paras 44.1–44.21) on cross-border working from a home or other relevant place (e.g., second home, holiday rental, friend/relative’s home). 

The section is aimed at remote work performed from a private place in the other State that is not the enterprise’s premises and not a customer/supplier/associated enterprise premises.

New conditions and clarifications on the analysis required

The new section clarifies how to apply Article 5(1) to remote work:

• Assess the relevant period only: PE is determined based on the facts and circumstances during the period under review (not past/future patterns);

• “Fixed” still matters: the place must have sufficient permanence; recurring use can be assessed over time; what matters is time spent working there (not upkeep costs);

• <50% working-time (12 months): where the individual works from the home/other place less than 50% of total working time over a relevant 12-month period, that place would generally not be treated as the enterprise’s place of business. Working time is driven by actual conduct (policies help only if they match reality);

• ≥50% → facts & circumstances + “business nexus”: if the individual works there at least 50%, the key question becomes whether there is a commercial / business reason for the enterprise’s activities to be carried on in that State.

New clarifications on what may constitute a ‘commercial reason’

The Commentary indicates that a business nexus may exist where the individual’s physical presence in the State facilitates the enterprise’s business in a meaningful way. Indicators include situations where:

• Regular meetings or direct interaction with customers in that State that benefit from physical presence;

• Building a new customer base or identifying business opportunities that require being locally present;

• Identifying suppliers, managing supplier relationships, or overseeing contractual arrangements in that jurisdiction;

• Providing real-time or near real-time services across time zones (e.g., call centres, virtual IT support, medical services) where location materially supports service delivery;

• Being located near institutions or professionals whose expertise is relevant to the enterprise’s activities (e.g., research collaboration with a university);

• Working closely with other businesses where proximity supports joint activity or cooperation;

• Performing services for customers that require physical presence in that State (e.g., training, repairs at client premises);

• Meaningful interaction with employees or personnel of the enterprise or associated enterprises where physical presence facilitates the business.

These indicators apply regardless of whether the interaction is with independent third parties or associated enterprises.

New clarifications on what does not constitute a ‘commercial reason’

A central clarification is what does not meet the “business nexus” condition:

• It is not met where remote work is allowed solely to obtain or retain the individual’s services;

• It is not met where remote work is allowed solely to reduce office costs;

• It should not be assumed merely because customers/suppliers (or an associated enterprise) are present in that State, or because of a time-zone difference. The Commentary clarifies that engagement with customers or suppliers that is merely intermittent or incidental does not establish that the home is a place of business of the enterprise;

• Paragraph 5(4) on preparatory/auxiliary services, as well as paragraph 5(5) on dependent agents still need to be considered separately.

Removal of Ambiguity

The 2025 update also deleted outdated examples and wording that caused confusion. Previously, the commentary focused on whether the employer had “required” an employee to work from home (explicitly or implicitly) as a key test for a home office PE. This was subjective and led to uncertainty. The new guidance drops the “employer requirement” criterion.