Introduction – International mobility at the heart of the OECD’s current reflections
Over recent years, the OECD has devoted increasing attention to the tax implications of international mobility of individuals. Initially addressed primarily through the lens of corporate taxation and value creation (BEPS), this reflection has progressively extended to individuals, driven by the rise of remote work, the digitalisation of economic activity and profound changes in lifestyles.
Current treaty rules, in particular those governing tax residence and the resolution of dual residence situations, are largely based on concepts developed at a time when international mobility was less frequent, more stable and more linear. Contemporary mobility patterns, by contrast, are often discontinuous, multi-jurisdictional and, in some cases, deliberately de-territorialised.
The public consultation launched by the OECD on the global mobility of individuals forms part of this broader context. It highlights a number of structural tensions between the existing treaty framework and the realities encountered in practice. The analysis below offers a synthesis of the key issues brought to light by this consultation, informed by a practitioner’s perspective.
I. The erosion of treaty residence criteria for individuals
The observations developed in this section are drawn from recurring issues encountered in my practice as an international tax adviser and were shared with the OECD as part of the public consultation on global mobility.
Treaty rules for determining tax residence traditionally rely on a well-established hierarchy of criteria: permanent home, centre of vital interests, habitual abode and nationality. These criteria are largely qualitative and presuppose the existence of a dominant geographical anchor.
That assumption is becoming increasingly fragile.
In situations that are now common, such as long-term international assignments, a taxpayer may have a dwelling available both in the State of origin and in the host State, rendering the permanent home criterion ineffective. The centre of vital interests test, intended to identify the State with the strongest personal and economic ties, becomes equally difficult to apply where professional activity, income sources, asset management and personal life are spread across several jurisdictions.
The OECD Model Commentaries advocate a holistic assessment based on a non-exhaustive set of factors. In practice, however, this approach increases legal uncertainty and leaves significant room for divergent interpretations between tax authorities and courts.
These difficulties are even more pronounced for more contemporary profiles, such as digital entrepreneurs or “digital nomads”, whose activities are carried out online, without a stable place of work, and whose physical presence is fragmented across multiple States during the same year. In such cases, treaty criteria appear to presuppose a degree of territorial stability that no longer reflects observed realities.
These issues will be further discussed at the OECD public consultation conference to be held on 20 January at the OECD Conference Centre in Paris, where I will also have the opportunity to hear the experiences and perspectives of other experts and practitioners facing similar challenges.
II. Mobility, temporality and residence conflicts: the blind spot of split-year situations
Another major difficulty, also raised in my contribution to the OECD, lies in the inadequate treatment of the temporal dimension of international mobility.
Tax treaties implicitly operate on an annual concept of residence, whereas domestic laws may recognise residence on a partial or intra-year basis. The interaction of asymmetric domestic residence rules is therefore likely to generate residence conflicts that treaties are ill-equipped to resolve.
The France–Italy mobility scenario is particularly illustrative, although it is by no means unique. It reflects broader issues that may arise between any two States where one applies a full-year approach to residence, while the other recognises residence arising during part of the year.
Under Italian law, tax residence is assessed on a full-year basis where one of the statutory criteria is met for more than 183 days during the calendar year. French law, by contrast, allows tax residence to arise as soon as one of the criteria set out in Article 4 B of the French Tax Code is fulfilled, including during the course of the year.
This asymmetry may result in situations of dual residence, and therefore double taxation, where a taxpayer relocates to France in the second half of the year while still exceeding the 183-day presence threshold in Italy.
Paradoxically, it may also give rise to situations of absence of tax residence. This may occur, for example, where a taxpayer leaves France in the second half of the year to settle in Italy, ceases to meet any of the criteria under Article 4 B of the French Tax Code following departure, yet fails to reach the 183-day threshold required under Italian law. In legal terms, such a taxpayer could find themselves regarded as resident in no State for the year concerned.
Whether they lead to double residence or absence of residence, these situations reveal a blind spot in treaty law, which remains insufficiently equipped to deal with intra-year mobility.
III. Fragmented professional mobility and disproportionate compliance burdens
The issues raised in the OECD consultation also extend to the very practical consequences of fragmented professional mobility for businesses.
In many jurisdictions, payroll withholding obligations are triggered by physical presence of non-resident employees, sometimes from the first day of activity. In France, remuneration paid for work physically performed on French territory by non-residents is subject to a specific withholding tax, with monthly reporting and payment obligations borne by the employer.
In the context of short-term assignments, cross-border teleworking or ad hoc missions, these rules may generate significant compliance costs that are often disproportionate to the tax at stake. Such difficulties are frequently encountered in practice and were highlighted in my contribution to the OECD.
The application of Article 15 of the OECD Model Tax Convention, particularly where the remuneration cost is borne by an entity located in the State where the activity is exercised, further exacerbates these constraints, even for assignments lasting only a few months.
Recent treaty solutions, such as the inter-State compensation mechanisms introduced under the France–Switzerland tax treaty in relation to teleworking, demonstrate that pragmatic responses are possible, reconciling the protection of taxing rights with operational simplification. These experiences provide valuable avenues for future reflection.
IV. Mobility of decision-makers and the risk of multiple corporate residence
The OECD consultation also provided an opportunity to share observations regarding the impact of international mobility on corporate tax residence, particularly in highly digitalised environments.
Where directors and key decision-makers perform their functions remotely from several jurisdictions, traditional corporate residence criteria based on place of effective management or similar concepts become increasingly difficult to apply. In practice, several States may simultaneously assert corporate residence, each relying on partial yet plausible connecting factors.
Such situations are increasingly encountered in entrepreneurial structures with limited physical substance, where governance is fragmented and exercised in a dematerialised manner. Where a tax treaty applies, the mutual agreement procedure may offer a potential resolution, albeit at the cost of prolonged uncertainty. In the absence of a treaty, the risks of double or multiple worldwide taxation become particularly acute.
These practice-driven observations were incorporated into the OECD consultation and once again highlight the growing mismatch between rules designed for centralised governance models and contemporary forms of international entrepreneurship.
V. Concluding reflections: towards a reasoned approach to securing tax residence
The challenges highlighted by recent OECD work do not suggest that existing treaty rules are fundamentally flawed. Rather, they reflect a growing mismatch between largely qualitative legal concepts and the complex, fragmented and evolving realities of international mobility.
Under the current legal framework, tax residence determination still relies heavily on a holistic assessment of facts and circumstances. While this approach preserves flexibility, it also exposes mobile taxpayers to lasting areas of uncertainty, which may ultimately call into question the tax treatment adopted, particularly in the context of audits or litigation.
In this context, it appears increasingly appropriate for expatriate and inpatriate taxpayers alike to undertake a thorough assessment of the robustness of their tax residence position. Such an analysis is not intended to artificially freeze situations, but rather to identify potential points of tension capable of weakening the residence position adopted: excessive dispersion of personal ties, ambiguous professional arrangements, insufficiently structured asset governance, or inconsistencies in reporting between jurisdictions.
Where current rules do not provide absolute legal certainty, the role of the adviser is precisely to recommend preventive, coherent and defensible behaviours. This involves a global approach encompassing personal life, professional activity and the organisation of assets, in order to make a taxpayer’s fiscal centre of gravity more clearly identifiable.
Such an approach does not eliminate the possibility of disputes with tax authorities, but it significantly strengthens the taxpayer’s ability to justify, on a documented and reasoned basis, the connection of their situation to a particular State and to defend the tax treatment applied.
Pending potential developments of the treaty framework, including the introduction of more objective criteria or quantitative indicators, this pragmatic and preventive approach remains one of the key levers for securing international mobility situations.
