Understanding the 2025 OECD Model Tax Convention Update: What ADIT Students Need to Know

Feb 10 / Linda Mercel

If you're preparing for the ADIT Principles of International Tax exam in June 2026, there's an important update you need to know about. The OECD published its 2025 Update to the Model Tax Convention in November 2025, and these changes will be examinable from June 2026 onwards.

As your new tutor for the upcoming course, I want to walk you through what these updates mean for you as a student, and how we'll tackle them together in our weekly tuition classes starting on 3rd March.

Why This Matters for Your ADIT Success

The OECD Model Tax Convention is the foundation of how countries structure their tax treaties, and it comes up consistently in ADIT exams. Looking at past papers, Permanent Establishment questions appear regularly in Section B case studies, while topics like Mutual Agreement Procedures and Exchange of Information feature in Section A essays. The 2025 updates touch on all of these areas, making understanding and applying them essential for June 2026 candidates.

These updates reflect real changes in how businesses operate post-pandemic, particularly around remote working, and they clarify some of the trickiest areas that come up in both practice and exams. Understanding them well will give you a significant advantage.
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Key MTC Changes for ADIT Candidates

Article 5 - Permanent Establishment: The Rise of Remote Working

This is the headline change, and it's the one most likely to feature in upcoming ADIT exams. The Commentary now provides detailed guidance on when a home office creates a Permanent Establishment - a question that was rare before 2020, but is now incredibly common.

The updated guidance introduces:
  • A 50% working-time threshold - This gives us a clear indicator. If an employee works from home in another country for more than 50% of their time over 12 months, that home may constitute a place of business. Notice I said "may" - the percentage alone isn't decisive.
  • A commercial-reason test - This is crucial. The key question is: does the employee's presence in that country facilitate the business? Are they meeting clients there? Is there a time-zone advantage? Or is it simply that the employee wanted to live there for personal reasons? The Commentary includes five detailed examples (labelled A through E) showing different scenarios and outcomes.

How this could be examined:

  • Section A essay: "Discuss how the 2025 updates to the OECD Model Tax Convention address the challenges of determining PE status in an era of remote working" (25 marks)
  • Section B case study: A scenario with employees of different companies working remotely in various countries for different percentages of time, requiring you to apply both the quantitative threshold and qualitative commercial-reason test to determine PE status


In our sessions, we'll work through multiple scenarios together, applying both the percentage test and the commercial-reason analysis. I'll share examples from my own experience where these issues have come up with real clients, because understanding the practical application makes the exam technique so much clearer.

Article 9 (and Articles 7 & 24) - Associated Enterprises and Transfer Pricing

The 2025 update significantly strengthens the connection between the Model Tax Convention and the OECD Transfer Pricing Guidelines. This is important because it means competent authorities conducting Mutual Agreement Procedures must now consider the Transfer Pricing Guidelines, including the 2024 guidance on Amount B.

The key developments:
  • Clearer guidance on how financial transactions and debt/equity classification interact with the arm's length principle
  • More explicit requirements around corresponding adjustments - when one country adjusts profits, when must the other country make a matching adjustment?
  • Integration of Amount B of Pillar One into treaty-based dispute resolution

How this could be examined:

  • Section A essay: "Critically evaluate how the 2025 updates to Article 9 strengthen the relationship between tax treaties and transfer pricing principles" (25 marks)
  • Section B case study: A transfer pricing scenario involving financial transactions between associated enterprises, requiring analysis of whether debt or equity classification applies and the potential impact of corresponding adjustments

Article 9 has appeared in past ADIT exams both as standalone essays and integrated into complex case studies, often alongside Article 25 (MAP). Looking at older past papers, I can see that examiners like to test your understanding of how these articles work together in practice.

Article 25 - Mutual Agreement Procedure: Clarifying the Interaction with World Trade Organisation Rules

This might sound technical, but it's actually a really important clarification. The new paragraph 6 addresses a long-standing uncertainty: how do tax treaties interact with the dispute resolution provisions in the WTO's General Agreement on Trade in Services (GATS)?

The update confirms that:
  • Tax treaty mechanisms take priority in determining whether a measure falls within treaty scope
  • Competent authorities have the primary role in scope decisions
  • MAP and arbitration proceedings must consider Amount B guidance when resolving transfer pricing disputes

How this could be examined:

  • Section A essay: MAP has been examined multiple times as a standalone essay topic. The 2025 updates add fresh material for a question like: "Analyse the role of paragraph 6 of Article 25 in clarifying the relationship between tax treaties and international trade agreements."
  • Section B case study: Integrated with an Article 9 scenario where a taxpayer seeks MAP relief

Article 25 is examined regularly - so being confident with the latest updates is crucial.

Article 26 - Exchange of Information: Expanded Use and Disclosure Rules

The Commentary updates to Article 26 reflect the reality of modern tax administration and international cooperation. The changes clarify:
  • Information exchanged between tax authorities can be used for tax matters involving persons other than those initially identified (subject to confidentiality protections)
  • New rules on reflective non-taxpayer-specific information - essentially, anonymised statistical data
  • Requirements for bilateral consultation before any third-party disclosure


Article 26 appeared in the June 2024 and June 2023 papers, showing the examiners' ongoing interest in exchange of information topics.

How this could be examined:

  • Section A essay: "To what extent do the 2025 updates to Article 26 balance the need for effective information exchange with taxpayer confidentiality protections?" (25 marks)
  • Section B case study: A scenario involving information exchange between multiple jurisdictions with questions about permitted uses and disclosure obligations
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How We'll Cover This in the Principles of International Tax Course

When I teach, I focus on three things: understanding the principles, applying them to real scenarios, and mastering exam technique.

With the 2025 OECD MTC updates, this means:
1. Interactive sessions with real examples
I'll bring in scenarios from my years of practice (anonymised, of course) showing how these issues play out in the real world. I’ll encourage you to share your experience of issues like remote working PEs.

2. Exam-focused practice
We'll work through both Section A essay questions and Section B case studies together. For essays, I'll show you how to structure a comprehensive answer that demonstrates critical analysis. For case studies, we'll practice identifying the relevant issues, applying the correct articles, and presenting clear advice.

3. Building your confidence
These updates might seem daunting at first, but I promise you - by the time we've worked through them together, you'll feel confident tackling any question the examiners throw at you. My goal is for every student to walk into that exam room feeling prepared and capable.
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Your ADIT Permitted Texts - Important Update

The 2025 OECD Model Tax Convention update is now on the permitted texts list for relevant ADIT exams. This is excellent news because you can bring it into the exam with you.

However - and this is important - if you're using a self-printed version of any permitted text, you must request permission in advance using the CIOT approval form. Don't leave this to the last minute. The rules for using permitted texts are available on the CIOT website.

In our sessions, I'll show you how to use the Model Tax Convention effectively during the exam - it's not about copying out chunks of text, but knowing where to find specific provisions and Commentary quickly when you need them.
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Why I'm Excited to Be Your ADIT Tutor

This is my first time teaching ADIT Principles of International Tax, and I'm genuinely excited about it. I've spent many years working with international tax issues in practice and training tax professionals, but teaching ADIT students is a new challenge for me.

What I bring to this course is:
  • Deep practical experience with the issues covered in the syllabus, including the new areas addressed by the 2025 updates
  • A passion for making complex topics clear - I firmly believe that if something seems impossibly complicated, it's usually because it hasn't been explained well
  • A focus on your success - I want every single one of you to pass, and I'll work hard to give you the tools and confidence you need


 I know you're making a significant investment in this course - both financially and in terms of your time - and I take that responsibility seriously. My approach is to be as approachable and supportive as possible. If something doesn't make sense, please ask. If you need something explained a different way, tell me. This is your course, and I'm here to help you succeed.
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Looking Ahead to June 2026 Exams

The OECD Model Tax Convention is fundamental to Principles of International Tax, and based on past exam papers, questions touching on Articles 5, 9, 25, and 26 appear consistently across both sections. With the 2025 updates now examinable, expect the examiners to test your knowledge of these changes.

The good news? We have plenty of time to cover everything thoroughly. By the time we finish the tuition and revision phases of the course, you'll have:
  • A solid understanding of all four major updates
  • Practice applying them to both essay and case study questions
  • Clear exam strategies for each question type
  • The confidence that comes from working through realistic scenarios
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Ready to Get Started?

Our ADIT Principles of International Tax course begins on 3rd March 2026 with weekly tuition classes running at 4pm on Tuesdays. If you haven't enrolled yet, there's still time - you can book here.

If you have any questions about the course, the 2025 updates, or the ADIT qualification more generally, I'd love to hear from you. I'm looking forward to meeting you all in March and helping you get to grips with these important updates.

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Linda Mercel, Director of Tax Training and Learning, ExtraTax Training

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Online ADIT Courses

If you would like to join the ADIT Principles of International Tax classes or one of our other ADIT courses, please get in touch with the ExtraTax Training team by emailing info@extrataxtraining.com or calling +44 (0)28 9590 5990.
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