The OECD finally acknowledges remote work exists. Here's what that means for you.
Five years after the pandemic proved that work doesn't need an office, international tax rules are finally catching up. Sort of.
In November 2025, the OECD published its first major update to the Model Tax Convention since 2017. The headline? New guidance on when remote workers create a taxable presence—a "Permanent Establishment"—for their employers in another country.
This matters. For years, the question of "can I work from Portugal for a few months?" has been met with corporate legal teams nervously sucking air through their teeth. Not because anyone wanted to say no, but because nobody knew what "yes" might cost.
Others knowingly turned blind eyes to employees who they knew weren’t exactly working from home. In some organisations, an unofficial workation policy became ‘don’t ask, don’t tell’ - which worked okay for a while, until there was a crisis, or somebody took a closer look at things like the applicable employment contract, data processing agreement, insurance policy, or some other aspect of compliance that was never going to allow for this.
Tax and tax residency have always been major areas of concern, and, like most areas of international law, they are slow to change and to respond to how people live and work in a globally mobile and interconnected world. As such these questions always hung in the air unresolved or on balance of probability.
Now we have something closer to an answer. But like most things in international tax, it's complicated, and frankly years slower than the real world situation.
Now we have something closer to an answer. But like most things in international tax, it's complicated.
What actually changed
The OECD introduced a two-part test to determine whether a remote worker's home office (or Airbnb, or beach café) creates tax obligations for their employer.
Test 1: The 50% Threshold
If you work from a location for less than 50% of your total working time over any 12-month period, that location generally won't be considered a fixed place of business for your employer.
This is the relief valve. Three months in Lisbon? Probably fine. A summer in Croatia? Likely okay. The OECD is effectively saying: short-term mobility shouldn't trigger corporate tax headaches.
Test 2: The Commercial Reason Test
But here's where it gets interesting. Even if you exceed 50%, your employer doesn't automatically have a problem. The question becomes: is there a commercial reason for you to be there?
High-risk activities include:
Meeting clients or customers face-to-face
Developing new business relationships
Managing suppliers locally
Delivering services that require physical presence
Low-risk activities:
Working remotely for personal preference
Time zone convenience (without local business operations)
Simply having customers who happen to be in the same country
The OECD explicitly stated that allowing remote work "solely to retain employee services" or "to reduce office costs" does not constitute a commercial reason. In other words: if you're working from Barcelona because you like Barcelona, and your actual work has nothing to do with Spain, your employer probably isn't creating a Spanish tax presence.
Why this matters now
We're living through a strange moment in work history. The technology to work from anywhere has existed for years. The pandemic proved it works at scale. Millions of people have restructured their lives around location flexibility.
But the rules? The rules were written for a world where "going to work" meant physically going somewhere. Where your employer's office was a fixed address, and that address determined tax obligations in clear, predictable ways.
That world is gone. And until now, international tax frameworks have been pretending otherwise.
Companies have responded to this uncertainty in predictable ways: restriction. "You can work from home, but not that home." Blanket policies limiting international work to 30 days per year—not because that's the actual legal threshold, but because nobody wanted to find out where the real line was.
The OECD guidance doesn't solve everything. But it does provide something employers have desperately needed: a framework for saying yes.
What's still missing
Let's be honest about the gaps – because there are significant ones.
Freelancers and contractors? Barely mentioned!
The guidance focuses almost entirely on employees. If you're self-employed — and millions of remote workers are — you're largely on your own. Tax residency, income sourcing, reporting obligations across borders: the OECD punted on all of it.
This is a glaring omission. The freelance economy and remote work grew up together. Ignoring one while addressing the other makes no sense.
Digital Nomad Visas: Immigration ≠ Tax
Here's a trap that catches people constantly: just because a country lets you stay and work there doesn't mean your tax situation is sorted.
Digital nomad visas solve the immigration question. They rarely solve the tax question. The OECD guidance doesn't bridge this gap — it doesn't even really acknowledge it exists.
If you're planning to use a digital nomad visa, don't assume your tax obligations are covered. They almost certainly aren't. You need to get individual advice about your specific situation, from a qualified and indemnified professional (like Entre Trámites in Spain.) Hopefully it goes without saying that nothing you’re reading on this page constitutes such advice - this is information for the world in general, not for any individual taxpayer to depend on.
Payroll and Social Security? Good luck with that…
The guidance offers almost nothing practical on when payroll withholding obligations kick in for short or medium-term remote work. Social security across borders? Still a maze.
For employers, this remains the operational nightmare. Even if you're confident there's no Permanent Establishment risk, you might still face payroll registration requirements, social security contributions, or local employment law obligations. The OECD waved at these issues without actually addressing them. Maybe this will be addressed in further updates due during 2026.
"Hire from anywhere" is different
The guidance treats international remote work as a mobility scenario — employees temporarily working from different locations. But many companies now hire people who will never work from headquarters. They're not mobile; they're permanently distributed. They may be settled remote workers, they may be digital nomads… but they’re never going ‘back’ to the office.
That's a fundamentally different model, with different risks. The OECD framework doesn't really account for it.
What should you actually do?
If you're an employee wanting to work internationally:
The 50% threshold gives you room. A few months abroad is more defensible than ever.
Personal reasons matter. Working from Valencia because you like Valencia is lower risk than working from Valencia because your company has Spanish clients you're servicing.
Don't assume your employer's policies will update immediately. Legal teams are cautious. But this guidance gives you ammunition to ask for more flexibility.
If you're an employer with distributed teams:
Review your existing policies. Many were written during peak uncertainty and may be more restrictive than necessary.
Focus scrutiny on senior roles and revenue-generating activities. That's where real risk concentrates.
Start tracking working locations properly. The OECD framework requires you to actually know where people are working and for how long.
If you're a freelancer:
This guidance doesn't help you much. Sorry.
Your situation still depends on bilateral tax treaties, your country of residence, and wherever you're working from — and those rules haven't changed.
The bigger picture
We're watching regulation slowly, painfully catch up to reality. In my 26th year of working remotely, it’s about time… but then we only have to remember that there’s still no meaningful framework to tax global corporations fairly for profits where they are generated.
So this OECD update isn't revolutionary, and it's not even complete. But it represents something important: an acknowledgment that the way we work has fundamentally changed, and that pretending otherwise isn't tenable.
For years, remote workers have been operating in a grey zone — technically possible, legally murky. Every "work from anywhere" arrangement involved some degree of hope that nobody would look too closely at the tax implications. And every digital nomad without a visa defining them as not really nomadic at all, will still keep their laptop out of sight when they arrive at a border checkpoint for their next ‘holiday.’
That's not sustainable. Not for workers who deserve clarity about their obligations. Not for companies trying to compete for talent. Not for governments trying to collect tax revenue in a world where "workplace" no longer has a fixed address.
The OECD has taken a step. It's not the last step, and it's not enough. But it's movement — in a landscape that's been frozen for far too long.
Now if they could just figure out what to do about the rest of us.