Proposed changes to the Commentary on Art. 15(2) of the OECD Model and their effect on the interpretation of "employer" for treaty purposes

In March 2007, OECD Working Party No. 1 released the 2007 Discussion Draft entitled Revised Draft Changes to the Commentary on Paragraph 2 of Article 15, which was designed to improve on the 2004 Discussion Draft on the scope of Art. 15(2) of the OECD Model Tax Convention. These Discussion Drafts seek to clarify the explanation and interpretation of "employer" for purposes of Art. 15(2)(b) of the OECD Model. The explanation and interpretation of "employer" include, as one of the conditions, that the failure to satisfy Art. 15(2)(b) means that the work state has the right to tax a proportionate part of the employee's salary. This condition plays an important part in the cross-border secondment of employees. The 2007 Discussion Draft also seeks to respond, at least in part, to the criticism made in the legal literature of Para. 8 of the Commentary on Art. 15. This article discusses and analyses the 2007 Discussion Draft against this background.