The 2025 update to the OECD Model Tax Convention incorporates the latest international tax developments and provides enhanced guidance for negotiating and applying bilateral tax treaties, with full and condensed editions set for 2026.
The OECD published the 2025 Update to the OECD Model Tax Convention on 19 November 2025, incorporating the changes approved by the OECD Council on 18 November 2025. The update reflects the latest developments in international taxation and offers enhanced guidance for the interpretation and application of tax treaties. These changes will be incorporated into the forthcoming revised condensed and full editions of the OECD Model, to be published in 2026.
The OECD Model Tax Convention on Income and on Capital (the OECD Model) is a flagship publication used by both OECD Members and non-Members as a basis for negotiating, applying and interpreting bilateral tax treaties. It plays a key role in removing tax-related barriers to cross border trade and investment, helping to prevent tax evasion and avoidance, and providing a means to settle on a uniform basis the most common problems that arise in the field of international juridical double taxation. This document sets out the changes introduced in the 2025 update to the OECD Model, which were approved by the OECD Council on 18 November 2025.
The main changes to the OECD Model Tax Convention included in the 2025 Update are as follows:
- Changes to Article 25 and its Commentary that include as a new paragraph 6 of Article 25 a provision that confirms the role of competent authorities in determining whether a matter falls within the scope of a tax treaty for purposes of the dispute resolution mechanisms provided under the General Agreement on Trade in Services (GATS).
- Changes to the Commentary on Article 5 to clarify the circumstances in which an individual’s home could constitute a “place of business” of the enterprise for which the individual works. These changes are an evolution of existing principles and ensure the Commentary reflects modern working arrangements, providing additional certainty as to when a fixed place of business permanent establishment will, and will not, be created by an individual working from a home or other relevant place.
- Changes to the Commentary on Article 5 that add to the Commentary an alternative (optional) provision on activities in connection with the exploration and exploitation of extractible natural resources, together with related commentary. The centrepiece of the alternative provision is a lower permanent establishment threshold, which would be crossed after a non-resident enterprise had operated in a State for more than a bilaterally agreed time period.
- Changes to the Commentary on Article 9 that respond to questions raised in the context of Working Party 6’s work on the transfer pricing aspects of financial transactions (see Chapter X of the Transfer Pricing Guidelines) and that clarify the application of Article 9, especially as it relates to domestic laws on interest deductibility, such as those recommended in the final report on BEPS Action 4. Related changes to the Commentary on Article 7 and the Commentary on Article 24 accompany these changes.
- Changes to the Commentary on Article 25 related to Amount B that signpost specific language relating to tax certainty and the elimination of double taxation included in the report on Amount B. These changes are intended to ensure optionality is preserved in all dispute resolution mechanisms for non-adopting jurisdictions.
- Changes to the Commentary on Article 26 to: (i) expressly indicate that information received through exchange of information can be used for tax matters concerning persons other than those in respect of which the information was initially received; and (ii) reflect agreed interpretative guidance on taxpayer access to exchanged information and the disclosure of reflective non taxpayer specific information about or generated on the basis of exchanged information.
The 2025 Update also includes the changes and additions made to the observations and reservations of OECD Member countries and the positions of non-Members.
