UN Officially Releases UN Model 2025: Key Highlights

NEW YORK, DDTCNews — The United Nations (UN) has officially released the latest UN Model Tax Convention (UN Model), namely the UN Model 2025.

The UN Tax Committee has updated the UN Model to align the clauses of the model tax treaty with current developments and challenges.

"This latest revision of the UN Model continues an ongoing review process intended to ensure that the contents of the Model keep up with developments, including in-country practice, new ways of doing business and new challenges," reads the introduction to the UN Model 2025, as cited on Monday (7/9/2026).

One of the new articles introduced in the UN Model is Article 12AA on the taxation of fees for services. This article replaces Article 12A (fees for technical services) and Article 14 (independent personal services).

In general, Article 12AA allows the source state to tax payments for services on a gross basis. Tax on gross income may be imposed by the source jurisdiction without requiring a physical presence. See: Article 12AA of the UN Model: Breakthrough or New Burden for Source Countries?

"This change will eliminate questions regarding the scope of source states’ taxing rights and simplify the application of the Model," reads the UN Model 2025.

In addition, the UN Model 2025 also contains Article 5A, which governs income from the exploration for, or exploitation of natural resources.

Under Article 5A, a non-resident is deemed to have a permanent establishment (PE) in the source state if it conducts exploration or exploitation of natural resources for a minimum of 30 days. As a consequence, profits attributable to that PE may be taxed by the source jurisdiction.

"This Article was added to the Model in 2025 to ensure that the State in which natural resources are located will capture an appropriate share of the location-specific economic rents attributable to these valuable assets," reads the commentary to Article 5A of the UN Model 2025.

Further, the UN Model 2025 also introduces a new article relating to insurance premium payments, namely Article 12C (insurance premiums), as a replacement for Article 5 paragraph (6) governing the insurance PE.

With this article in place, insurance premiums arising in a source jurisdiction and paid to another jurisdiction may be subject to withholding tax on a gross payment basis.

"Article 12C allows a source state to tax insurance premiums on a gross basis rather than the former approach of deeming a PE to exist and taxing the profits of the deemed PE. Developing countries viewed the Article 12C approach as simpler and easier for them to administer," reads the introduction to the UN Model 2025.

Moreover, the UN Model 2025 also incorporates the subject-to-tax rule (STTR) in Article 1 paragraph (3) (persons covered), which aims to prevent double non-taxation. In simple terms, Article 1 paragraph (3) prevents the granting of tax treaty benefits where income covered by the tax treaty is subject to low taxation under the domestic provisions of the residence state.

The STTR has been added to the UN Model 2025 to address the concerns of developing countries, which have frequently relinquished taxing rights over certain income even where there is no double taxation on that income.

Through the UN Model 2025, the UN also expands the definition of royalties under Article 12. Payments for the use of software not related to the use of copyright are now also categorised as royalties.

The full UN Model 2025 can be accessed at the following link. (dik)