News in double taxation treaties

The Czech Republic and Japan continue to negotiate a new treaty

The second round of negotiations on a new double taxation treaty between the Czech Republic and Japan took place. The new treaty should replace the existing treaty between Czechoslovakia and Japan from 1977. We will keep you informed about further developments.

Ministry of Finance of the Czech Republic on the update of the OECD Model Tax Convention for the Avoidance of Double Taxation and its commentary

The Ministry of Finance has published a circular relating to  the update of the OECD Model Tax Convention and its commentary, which published during 2025. The key changes that we have already informed you about in a recent article relate in particular to the commentary on Article 5 – Permanent establishment.

In the circular, the Ministry explains the reasons on the basis of which the Czech Republic has applied a reservation to the new passages of the commentary concerning remote work setups. With this reservation, the Czech Republic takes a stand against the updated commentary, which introduced new criteria for assessing the establishment of a permanent establishment in connection with the performance of dependent activities remotely.

News from the EU

The Council of the EU updated the list of non-cooperative jurisdictions

The Council of the EU has updated the list of jurisdictions it considers to be non-cooperative in tax matters. Compared to the last update in October 2025, the following changes have been made: two jurisdictions have been newly added to the list – the Turks and Caicos Islands and Vietnam. On the other hand, three jurisdictions were removed from the list – Fiji, Samoa and Trinidad and Tobago.

As of 17 February 2026, a total of ten non-cooperative jurisdictions are listed on the EU list:

• American Samoa
• Anguilla
• Guam
• Palau
• Panama
• Russia
• Turks and Caicos Islands
• S. Virgin Islands
• Vanuatu

• Vietnam

In line with the usual revision cycle, one more update of this list can be expected during 2026, during October.

From the point of view of Czech taxpayers, this update is particularly important for the obligations arising from the rules for the taxation of controlled foreign companies (CFC rules).

If a Czech taxpayer is in the position of a controlling company in relation to an entity that is a tax resident of a jurisdiction listed on this list at the end of its tax period (or its permanent establishment located in such a jurisdiction), a special (fictitious) regime will apply to that entity. The activities of this controlled company and the disposal of its assets are viewed as if they were carried out by the controlling company in the territory of the Czech Republic. This income is then subject to taxation within the tax base of the Czech controlling company to the extent of its participation in the registered capital of the controlled foreign company.

Transactions or relationships with a counterparty from these jurisdictions may also give rise to a reporting obligation under the rules resulting from the local implementation of the EU DAC 6 Directive. It should be borne in mind that the hallmarks of cross-border arrangements involving persons from jurisdictions included in the EU list of non-cooperative jurisdictions are subject to a reporting obligation regardless of the fulfilment of the principal benefit test.

World news

Canada accedes to the GIR MCAA

On 6 February 2026, Canada signed the GloBE Multilateral Agreement on Information Exchange (GIR MCAA).

This Pillar II agreement allows for the automatic exchange of information between the participating jurisdictions, namely the exchange of annual global information returns (GloBE Information Return), the filing of which is required  by the GloBE Model Rules.

As of 17 February 2026, a total of 28 jurisdictions have signed the GIR MCAA. The current list of signatories is available on the OECD website.

OECD releases updated guide to tax dispute resolution

The OECD has published an updated edition of the Manual on Effective Mutual Agreement Procedures (“MEMAP”), which serves as a non-binding tool for tax administrations and taxpayers to resolve cross-border disputes under double tax treaties.

The new edition contains 59 recommendations, 50 of which are primarily addressed to tax administrations and 9 taxpayers. This is the first major revision of the document since 2007, reflecting the experience of the BEPS project, especially from Action 14 aimed at streamlining the Mutual Understanding Procedure („MAP“). The update is part of a broader OECD initiative aimed at strengthening the level of certainty in international taxation.

MEMAP is primarily intended for the competent authorities of individual states that conduct MAP proceedings, but at the same time it also provides practical guidance to taxpayers. The handbook systematically covers the entire “life cycle” of MAP proceedings – from dispute prevention and access to MAP, through possible unilateral dispute resolution (unilateral relief), to bilateral negotiations between states and the possible use of arbitration.

The document also includes practical tools, including recommended templates for applying for a MAP and for communication between the relevant authorities.

The structure of the handbook focuses mainly on four areas:

• Dispute prevention – emphasis on timely communication with the tax administration and the use of tools that can prevent disputes.
• Access to MAP – clearer rules for applying for a MAP and recommended templates to simplify administration.
• Bilateral negotiations and possible arbitration – practical guidelines for conducting negotiations between competent authorities and using arbitration if states do not agree within the standard deadline.

• Process efficiency – recommended (“aspirational”) time frames for each stage of the management.

The MAP is an important tool for resolving disputes in the application of double taxation treaties and makes it possible to eliminate cases of double taxation arising as a result of different approaches between countries. In practice, it is used mainly in disputes concerning transfer pricing adjustments, the existence of a permanent establishment, a conflict of tax residence or the application of withholding taxes under the relevant contract.