What is Permanent Home Test?

How it works

The permanent home test is step 1 of the OECD Model Treaty article 4(2) tie-breaker. When two countries claim residency under their domestic rules, the treaty asks: in which one (or both) is a permanent home available to the individual?

Three outcomes:

1. Permanent home in only one state → that state wins. Cascade ends.
2. Permanent home in both states → cascade moves to step 2 (centre of vital interests).
3. Permanent home in neither state → cascade skips step 2 and goes directly to step 3 (habitual abode).

The OECD Commentary on article 4 defines a "permanent home" loosely but with three specific elements:

• A dwelling of any form — house, apartment, rented room, even a long-term hotel suite if continuously available.
• At the individual's permanent disposal — usable at any time, not as a guest or occasional visitor.
• Continuously available — not merely available for a short or specific stay.

What counts as continuously available:

• Owned home kept furnished and unrented.
• Long-term rented flat, even if currently sublet to a friend on flexible terms.
• A room in a relative's home specifically reserved for the individual's use.
• A long-term hotel suite with a paid retainer.

What does not count:

• A hotel booked for specific trips.
• A rented apartment let out long-term to an unrelated tenant.
• A holiday home occupied for short stays only and not "available continuously".

Why ownership doesn't matter

The OECD test is about availability for personal use, not ownership. A long-term tenancy can establish a permanent home; full ownership of a holiday cottage occupied two weekends a year usually doesn't (no continuous availability for normal living).

This catches founders who think "I sold my house" solves it. Selling helps, but the test is about whether a home is available to you — if your spouse keeps a French rental and you stay there whenever you visit, the French apartment is your permanent home for treaty purposes regardless of whose name is on the lease.

Examples

• French executive moves to Switzerland. Sells the Paris apartment, signs a one-year furnished lease in Geneva. Spouse keeps her Paris pied-à-terre rented in her name; he stays there on family visits. Both Switzerland (Geneva lease, his disposal) and France (Paris pied-à-terre, jointly used) qualify as permanent homes. Cascade moves to vital interests.
• British consultant relocates to Dubai. Sells the London flat, signs a two-year Dubai lease. London property fully sold, no available accommodation. Dubai is the only permanent home → cascade ends at step 1, residency assigned to UAE. Treaty position holds clean.

Common mistakes

• Believing "sold = clean". A spouse, family member, or business arrangement keeping a home available to you re-creates the permanent home in the old country.
• Underestimating long-term rental. Modern lifestyle (digital nomads, short-term rentals) tries to live without a permanent home anywhere. The OECD test then skips step 2 and goes straight to habitual abode — which is harder to control.
• Confusing ownership with availability. A rented room you have ongoing access to is a permanent home. An owned property rented out long-term to a tenant is not.
• Forgetting to document the closure. Closing utility accounts, surrendering leases formally, transferring ownership clearly are evidence the old home is no longer "available". Without paperwork, tax authorities can argue continued availability years later.