Austrian Federal Ministry of Finance comments on update of OECD Commentary on Model Tax Convention regarding home office permanent establishment

In mid-November 2025, the OECD published a broad update of the OECD Commentary on the Model Tax Convention with comprehensive guidelines under which circumstances an individual working cross-border from a home office triggers a PE for the company (see this newsletter on this topic). The specifications equally apply for business activities carried out from other relevant private places, such as secondary or holiday residences. At the beginning of the year, the BMF provided a summary and has taken its stance on the update of the statements to home office PEs.

As previously required, it is relevant for a home office PE to be triggered that the business activity of the company is carried out through a fixed place of business for a certain period. Furthermore, the exceptions for preparatory and auxiliary activities need to be considered. According to the update, the focus is whether the home office qualifies as fixed place of business. Thereby, two criteria need to be met: the working time indicator and the commercial reasons of the company. In its information letter, the BMF explicitly clarifies that for constituting a home office PE, both criteria need to be fulfilled together. Therefore, the BMF refers to the prerequisite of the working time criterion in home office even clearer than the OECD.

• Working time indicator: An individual spends at least 50% of the working time within a period of 12 months in home office.
• Commercial reasons: It is decisive that there is a commercial reason for the company that the business activities are carried out in the home office. For example, such reason is assumed, if the physical presence of the individual is required or facilitates exercising the business activities of the company in the home office state.

The statements of the BMF that other factors are applicable for cases in which the sole or most important individual operates the business activity of the company are unclear. According to for the view of representatives of the BMF, managing directors and executives (temporarily) working in home office continue to further represent such an exception from the general approach in home office cases. It remains to be seen which factors are to be considered for managing directors and executives that work in home office.

Practical tips/Outlook/Recommendations

• In general, according to the explanations of the BMF, a home office constitutes a PE, if the individual spends at least 50% of the working time in the home office within a time period of 12 months and the activity performed in home office provides an economic benefit to the company.
• The prerequisites under which a day qualifies as a home office day within the meaning of working time indicator, is significant for the calculation of the relevant time indicator in the future. This applies especially for activities (outside of the home office) directly at clients’ offices etc. in the home office state. Such detailed questions are currently neither answered in the OECD nor in the BMF information letter.
• Against this background, companies with cross-border working models need to further check the respective set up case-by-case regarding the working time in home office as well as regarding the commercial reason.
• Thus, companies need to regularly monitor and sufficiently document the extent of the home office activity as well as the reasons for working in home office.
• Especially for managing directors and executives (temporarily) working in home office, we recommend separate verification of the individual case to assess the risks of triggering a home office PE.
• According to the interpretation of BMF, the update of OECD Commentary applies from 2026 to the interpretation of all Austrian double taxation agreements including a provision in line with Article 5 of the OECD Model Tax Convention.
• The previous interpretation in the Austrian Transfer Pricing Guidelines referring to the letter rulings of the Express Answer Service (EAS) can be applied until the end of 2025 according to BMF. Therefore, the previous tax administrative practice is still applicable for scenarios in the past.