In brief from international taxation [October 2026]

OECD: Updated version of OECD model tax treaty released

On 30 September 2026, the OECD published the 2025 full version of the OECD Model Tax Convention, incorporating changes agreed in November 2025. One of the key updates concerns the commentary on permanent establishments and cross-border remote working, providing guidance on when working from a home office may create a permanent establishment. The guidance considers, among other factors, the proportion of working time spent at the home office and whether there is a commercial reason for working from that location.

Other changes include permanent establishment rules for activities involving natural resources, the commentary on Article 9 concerning intragroup financing, as well as mutual agreement procedures (MAP) and the exchange of information under Article 26.

Note that the Czech Republic has expressed reservations regarding the new approach to cross-border remote working.

European Union:

• Czech Parliamentary committee sets out its position on EU Taxation Omnibus proposal

On 17 September 2026, the Committee on European Affairs of the Czech Chamber of Deputies adopted a resolution on the EU Taxation Omnibus proposal. The committee supported the Czech government’s opposition to the proposed removal of the minimum shareholding requirements under the Parent-Subsidiary Directive and the Interest and Royalties Directive. It also called on the government to seek to retain Czech general partnerships (veřejná obchodní společnost, v.o.s.) and limited partnerships (komanditní společnost, k.s.) in the annex to the Interest and Royalties Directive during negotiations in the Council of the EU.

At the same time, the committee recommended that the government support certain simplification measures, including changes to the hybrid mismatch rules, the carryforward of unused interest expenses and the harmonization of controlled foreign company (CFC) rules under Model A.

Regarding the proposed R&D tax incentives, the committee adopted a reasoned opinion stating that the introduction of an EU-wide scheme would breach the principle of subsidiarity. In particular, it argued that the European Commission had not sufficiently demonstrated the need for harmonization at EU level and that the proposed measures could increase administrative burdens and interfere with member states’ tax autonomy. The opinion was subsequently submitted to the EU institutions.

• CJEU rules on neutralization of dividend withholding tax restriction by tax treaties

The Court of Justice of the European Union (CJEU) ruled in case C-139/25 concerning the taxation of dividends paid by Spanish companies to a US tax-transparent investment fund. While comparable Spanish funds were subject to a 1% tax, dividends paid to the US fund were subject to 15% withholding tax, which the CJEU considered a restriction on the free movement of capital.

The CJEU held that such a restriction may be neutralized by a bilateral tax treaty, but only if the discriminatory tax burden is fully offset. In the case of a tax-transparent fund, this may occur at the level of its unitholders, provided they can actually claim a tax credit that fully compensates for the excess withholding tax. The referring court must verify whether these conditions are met in practice.

Greece: Interest on intragroup loans used to finance dividend distributions is not tax deductible

Greece’s Council of State recently ruled that interest on intragroup loans obtained to finance dividend distributions is not tax deductible. The case concerned a company that borrowed from an affiliated entity to pay dividends to its shareholders due to insufficient cash reserves.

The court concluded that dividend distributions arise from the corporate relationship between a company and its shareholders rather than from its business activities. Consequently, the related interest expenses did not meet the general conditions for tax deductibility, and the court did not proceed to assess the specific rules on thin capitalization or intragroup transactions. The ruling follows similar decisions issued in 2023, confirming a consistent approach in Greek case law.