The Organization for Economic Co-operation and Development (OECD) has fired a warning shot to multinational companies as it opened a public consultation on the tax fallout from global remote work, arguing that the most disruptive outcome of post-pandemic labor mobility may not be the personal-tax mess everyone expected but a corporate-tax storm hiding in plain sight.

The organization’s latest paper is blunt: international tax rules built on physical presence, office footprints and fixed lines of managerial control are now buckling under the weight of millions of workers who log in from living rooms, co-working spaces, airport lounges or short-term foreign stays.

What the OECD diplomatically calls “changed ways of working” is, in substance, a structural assault on the assumptions that underpin global tax treaties. Remote work is fragmenting core business functions, scrambling permanent establishment tests, creating inconsistencies in profit-attribution frameworks and injecting uncertainty into place-of-effective-management standards that determine a company’s tax residence. The international system was designed for a world where executives sat together, staff clustered around identifiable offices and activities happened where companies said they happened. That world has dissolved.

For multinationals, the stakes are anything but theoretical. A single misclassified teleworker, or even a well-intentioned employee who extends a foreign stay, can inadvertently create a taxable presence for the employer in a jurisdiction where the firm has no commercial strategy, no compliance infrastructure and no appetite to be dragged into full corporate-tax filings. The OECD itself concedes that such employees can trigger a fixed-place PE, a dependent-agent PE or a services PE — any of which can open the door to corporate tax liabilities, transfer-pricing scrutiny, payroll obligations and local regulatory demands. The scenario sounds exotic, yet companies say it is playing out with increasing frequency.

Indian advisers argue the OECD’s consultation has landed at a moment when corporate tax teams are already stretched thin trying to track employee locations, interpret overlapping rules and anticipate tax authority challenges. “Remote work risks creating PE exposure — especially service PE, fixed-place PE or dependent-agent PE — and this may trigger corporate tax filings, transfer pricing attribution of profits and payroll obligations,” said Aditya Bhattacharya, Partner at King Stubb & Kasiva. He noted that the risk extends far beyond income-tax rules to include “employer-of-record implications, labor-law exposure and withholding requirements despite the absence of a formal entity.”

Bhattacharya added that companies are routinely blindsided when employees negotiating deals or performing core functions remotely are viewed as habitually concluding contracts in that jurisdiction — the classic hallmark of a dependent-agent PE. The exposure is immediate and, in many cases, neither planned nor preventable under today’s rules.

The pressures are sharper in India, where the workforce is globally dispersed and service-delivery models are built around cross-border collaboration. “When Indian employees split workdays across jurisdictions or deliver services remotely to foreign companies, India’s residency rules and treaty provisions often clash with the tax rules of the other country,” said Amit Maheshwari, Tax Partner at AKM Global. The troubling result is that what begins as a personal-tax collision often morphs into a corporate-tax risk for employers that have no presence in India but now face potential PE allegations.

Maheshwari flagged the reverse scenario as well: foreign employees temporarily working from India face rule ambiguity that leaves employers guessing whether they have inadvertently created a taxable nexus. And with virtual boards becoming normalized, the risk climbs up the hierarchy. “A senior executive attending virtual board meetings from another jurisdiction could inadvertently shift a company’s tax residence,” he warned, noting that tax authorities globally are now asking whether digital participation amounts to central management and control — a subtle but far-reaching adjustment that can rewrite a multinational’s tax footprint overnight.

Profit attribution, the quiet battlefield of treaty interpretation, could become the next flashpoint. The OECD has signaled that any PE triggered by remote work must undergo a full profit-attribution analysis, treating the PE as a notional standalone enterprise. In reality, attributing profits “as if” remote fragments of teams were autonomous entities is extremely difficult when functions, assets and risks are scattered across time zones and jurisdictions. Nitin Narang, Partner at Nangia & Co LLP, said the consultation makes clear that tax administrations are actively seeking input on these new corporate fact patterns.

“Concerns arise around the potential creation of PE due to remote workers, questions on corporate residence where significant management functions are dispersed globally, and difficulties in attributing profits to any resulting PEs,” he said. He added that transfer-pricing disputes will intensify as people functions — often the decisive indicator of value creation — become distributed in ways traditional models never contemplated. “The consultation requests feedback on fact patterns resulting from international mobility that pose difficult issues for the application of transfer-pricing regulations,” he said.

Some advisers say the OECD should move beyond identifying the problem and begin standardizing solutions. Rahul Charkha, Partner at Economic Law Practice, argued that India’s unique deemed-residency rule — which treats certain globally mobile Indian citizens as residents if they are not liable to tax elsewhere — must be expressly integrated into OECD guidance. He said cross-border planners and competent authorities need consistent treatment.

As he put it, the OECD’s illustrations should explicitly reflect Section 6(1A) of India’s law to avoid mismatches where source-state withholding applies but residence-state relief remains uncertain. This would help prevent the “stateless teleworker” problem the consultation warns about — a category of individuals who fall between systems and often leave employers bearing unexpected compliance burdens.

Charkha also urged the OECD to rethink hybrid mobility more broadly. High-mobility patterns — such as frontier working, partial-week telework or roles built on alternating host locations — cannot be governed by legacy rules, he said. Bilateral “frontier worker” arrangements, if adapted for hybrid schedules, could allocate taxing rights more cleanly, possibly through exclusive rights for one state or shared rights under a coordinated withholding-and-reconciliation mechanism administered by competent authorities.

He pushed for clearer rules on equity compensation too, a source of chronic double-taxation for globally mobile employees. The OECD, he said, should issue model sourcing guidance that mandates service-day apportionment across jurisdictions and aligns taxing events so that credits and refunds match economic reality rather than administrative convenience.

But Charkha’s most forceful recommendations relate to corporate tax — and to the heart of the OECD’s dilemma. He said the OECD Model Tax Convention on Income and Capital 2025 should be operationalized to create a coordinated safe harbor under which limited, non-client-facing remote work — below a measurable threshold and without contract-concluding authority — does not, by itself, create a fixed-place or dependent-agent PE. Such a rule would shield companies from aggressive assessments where the economic substance of the activity is negligible. For situations outside the safe harbor, he said bilateral advance rulings or APAs should be promoted so that PE status and profit attribution can be decided in a single integrated instrument, preventing the split outcomes that arise when treaty and transfer-pricing conclusions diverge.

The OECD’s first-phase review reveals a tax infrastructure that no longer maps to how companies actually operate. Remote work has dissolved the neat lines tax treaties rely on: a single employee can create a PE; a virtual board meeting can shift residence; dispersed teams disrupt transfer-pricing allocations; and profit attribution becomes nearly impossible to execute with precision. The consultation signals that governments must confront this dissonance and supply data before new rules are drafted. A public consultation meeting is planned for January 2026, with more concrete proposals due later in the year.

The direction of travel is unmistakable. Remote work is no longer an HR policy or a lifestyle perk. It is a material corporate-tax risk — and unless international standards evolve quickly, the next wave of global tax disputes may center not on digital giants or profit-shifting strategies but on where a lone employee opened a laptop.

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