14.01.2026MOF issues updated guidance on use of OECD model commentary in DTT interpretation
Updated guidance replaces 2023 decree and generally applies static application of the OECD model commentary
In a decree dated 24 December 2025, the German Ministry of Finance (MOF) updated its position on the application of the commentary on the OECD Model Tax Convention on Income and on Capital (hereinafter referred to as the “OECD model commentary”) for purposes of interpreting double taxation treaties (DTTs). The updated decree replaces earlier guidance dated 19 April 2023 (see GTLN dated 04/26/23) and can be seen as a reaction to a decision of the federal tax court dated 5 December 2023 in which the federal tax court took a different position than the MOF in its 2023 decree. The updated decree applies to all open cases.
The use of the OECD model commentary for the interpretation of DTTs is a controversially discussed topic in German tax law. The tax authorities in their 2023 decree have pursued a dynamic approach related to the interpretation of DTTs. According to this approach, the currently valid version of the OECD model commentary should generally be used for the interpretation of a DTT. The federal tax court in its 2023 decision took a different position and confirmed its longstanding position that an interpretation of a DTT must be based on a static interpretation. According to the view of the federal tax court, only the version of the OECD model commentary that was valid at the time whan the respective DTT was approved by the German legislator can be used for purposes of the interpretation of the respective DTT. As such, subsequent versions of the OECD model commentary should not be of relevance for the interpretation of a DTT.
The updated (two-page) decree now follows the view of the federal tax court and favors a static interpretation of DTTs, as summarized below.
In section 1, the decree states that it is established case law of the federal tax court that DTTs, as international treaties according to article 31(1) of the Vienna Convention on the Law of Treaties, must be interpreted in good faith and in accordance with the usual meaning and in light of its objectives and purposes (as confirmed by the federal tax court in its 2023 decision). The wording of a provision of a DTT represents the limits for interpretation.
In section 2, the decree states that if the wording of a provision of a DTT between OECD member states is identical to, or at least comparable with, a provision of the OECD Model Tax Convention on Income and on Capital (hereinafter referred to as the “OECD model convention”), the OECD model commentary related to a specific provision—and taking into account the observations of the OECD member states—in the version applicable at the time of the DTTs implementation into German law, must be considered as rebuttable evidence of the state practice of the OECD member states in interpreting the provisions of their DTTs corresponding to the OECD model convention.
Section 3 of the decree states that the OECD model commentary, in the version applicable at the time of application, reflects the understanding of the OECD member states regarding the interpretation of the provisions of the OECD model convention. The decree furthermore states that it does not constitute a legal norm, but aims to avoid conflicts of interpretation and promote consistency in decision-making. Therefore, within the limits of the wording of the respective DTT provision to be interpreted, the version of the OECD model commentary applicable at the time of application should also be used for interpretation, insofar as it contains, in particular, clarifications and refinements compared to earlier versions of the OECD model commentary.
Section 4 of the decree provides that if the wording of a provision of a DTT between OECD member states that is subject to interpretation is not identical to, or at least not comparable with, a provision of the OECD model convention, an interpretation based on the OECD model commentary is not possible (as confirmed by the federal tax court in its 2023 decision).
Section 5 of the decree finally provides that if other administrative guidance (including the publication of decisions of the federal tax court in the federal tax gazette) suggest a different interpretation of the respective DTT, this interpretation takes precedence over the OECD model commentary.
Deloitte Germany comments
The updated decree touches on some fundamental constitutional issues and the precedence between domestic law and supranational guidance on rules that the domestic law is based on. The updated decree comes as a welcome development and removes the uncertainty that was created by the prior 2023 guidance. The view of the tax authorities now falls in line with the view of the federal tax court, although it is difficult to understand why it took the tax authorities more than two years to adopt the view of the federal tax court.
Based on the wording of section 3 of the decree, it seems that the MOF did not entirely want to give up on the possibility of a dynamic interpretation: the reference to “the version of the OECD model commentary applicable at the time of application should also be used for interpretation, insofar as it contains in particular clarifications and refinements compared to earlier versions of the OECD model commentary” seems to indicate that the tax authorities might want to still take into consideration later OECD guidance. This might then result in the question whether later OECD guidance is just a mere clarification or refinement or whether such guidance constitutes a substantial change in the view of the OECD. It remains to be seen how the German tax authorities are going to apply this part of the guidance in practice.
The relevance of the updated decree can be highlighted by the latest round of amendments to the OECD model commentary that took place in November 2025, in particular with regard to the definition of a permanent establishment through remote work (home office). The OECD, in this regard, no longer refers to the criterion of the authority to dispose over a fixed place of business but introduces certain quantative criteria (50% test over a 12-month period). The question, which now must be answered based on the updated decree, is whether this update to the OECD model commentary is just a mere clarification or refinement or whether the update constitutes a more substantial change in the view of the OECD.
The updated decree will also have relevance for any future OECD guidance related to the global minimum tax rules of Pillar Two in relation to the German minimum tax rules as implemented into domestic tax law.
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