Tax treaties

Revised draft changes to the commentary on paragraph 2 of Article 15 of the OECD Model Tax Convention


12 March 2007


The OECD has released revised proposals for changes to the Commentary on paragraph 2 of Article 15 of the OECD Model Tax Convention.


That paragraph of the OECD Model Tax Convention provides that a non-resident employee who performs services in a country during a short period of time is not subject to tax in that country under certain circumstances. On 5 April 2004, Working Party No. 1 on Tax Conventions and Related Questions, which is the subsidiary body of the OECD Committee on Fiscal Affairs that is responsible for updating the OECD Model Tax Convention, released for public comments draft proposals for changes to the Commentary on that paragraph (see


The proposals were intended to clarify the application of the paragraph in the case of services that are provided through intermediaries. Paragraph 8 of the current Commentary, which deals with so-called “hiring-out of labour”, addresses one aspect of that issue. The proposals dealt with the interpretation of the words “employment” and “employer” and addressed the distinction between a contract of service and a contract for services, which is a common issue that tax authorities and taxpayers must confront.

The Working Party examined carefully all the comments received on the 2004 proposals and mandated a small drafting group to review the draft proposals in light of these comments. Following a suggestion by that group, a public consultation meeting with business representatives and other interested parties was held on 30 January 2006.  The tax administrations from 9 countries (Australia, Austria, Belgium, Germany, Greece, Hungary, Norway, Switzerland and the United Kingdom) and participants from Belgium, France, Germany, India, Italy, Luxembourg, the Netherlands, Sweden, the United Kingdom and the United States were present at the meeting. The purposes of the meeting were to better explain the draft changes, discuss practical cases in light of current country practices and allow participants to present their views.

After that meeting, revised proposals were prepared in light of the written comments received and the discussions at the meeting. At its subsequent meetings of February and September 2006, the Working Party examined these revised proposals, made a number of changes to them and decided that they should be publicly released with a view to continuing the discussion of these proposals in light of comments from interested parties.


An Annex to the revised proposals includes a marked-up version that shows the changes that have been made to the discussion draft released in April 2004.


Interested parties are invited to send their comments on these revised proposals before 1 July 2007. It is intended that the proposals will be finalized at the September 2007 meeting of the Working Party. Comments should be sent to:

Jeffrey Owens
Director, CTPA
2, rue André Pascal
75775 Paris

Please note that, unless otherwise requested at the time of submission, comments submitted to the OECD in response to this invitation may be posted on the OECD website.


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