In January, the OECD published Updated Guidance on Tax Treaties. Due to the many restrictions brought about by COVID-19 during 2020 and now continuing into 2021, the OECD Secretariat issued guidance on the impact of the pandemic on tax treaties – which represents its view on the interpretations of the provisions of these treaties.
It is important to remember that the guidance represents the view of the Secretariat on the interpretation of the provisions of tax treaties. This means that each jurisdiction may adopt its own guidance to provide tax certainty to taxpayers.
The guidance addresses the following:
Concerns regarding permanent establishment.
Concerns related to change of residence for entities and individuals including the application of the tie-breaker rules to dual residents where individuals were restricted from travel. Also, the potential change in the “place of effective management” of a company as a result of a relocation, or inability to travel, of board members or other senior executives.
Concerns related to income from employment including stimulus packages, telecommuting, and other changes to employment during this unprecedented time.