The permanent home test is the first step of the OECD treaty tie-breaker, and it decides a surprisingly large share of dual-residence disputes before the analysis ever reaches centre of vital interests. Article 4(2)(a) of the OECD Model Tax Convention allocates residence to the country where the individual has a permanent home available — and stops there, if the home is available in only one country. For taxpayers moving to Bulgaria, this means that what you do with the old-country home (sell, long-term lease, keep empty) is often more consequential than any other element of the relocation plan.
This guide is the companion to our Centre of Vital Interests 12 Factors article. It covers the definition of a permanent home under the OECD Commentary, what "available" means in practice, how short-term rentals and holiday homes fit in, and how Bulgarian residents secure the first-test win.
Why the First Test Decides So Many Cases
Article 4(2) of the OECD Model applies four tests in strict sequence: permanent home, centre of vital interests, habitual abode, nationality. The analysis stops at the first test that allocates residence to a single country. If the taxpayer has a permanent home in only one of the two treaty countries, residence is allocated to that country and the tie-breaker ends. Centre of vital interests, habitual abode, and nationality are never reached.
This is enormous. A founder with genuine Bulgarian life but who also keeps an empty Munich apartment has a permanent home in both countries — the analysis moves to the more elastic centre-of-vital-interests and habitual-abode steps. A founder who has sold or properly long-term leased the Munich apartment has a permanent home in Bulgaria only — the analysis ends immediately in Bulgaria's favour.
Practical consequence: for many relocations, the single biggest lever is the decision about the old-country home. Get that right and the rest of the substance file becomes corroborative rather than load-bearing.
What Counts as a Permanent Home
The OECD Commentary on Article 4 sets out the definition:
- A dwelling — not a vehicle, not a hotel suite booked for a trip. A house, apartment, or room used as a place of residence.
- With a lasting right of occupation — ownership, a long-term lease, or another legal right that allows continuous personal use.
- Available at any time on a continuous basis — not seasonally restricted, not let out for part of the year while the taxpayer lives elsewhere.
- Used or capable of being used as a genuine place of residence — daily life can take place there (sleeping, eating, receiving mail, working, hosting guests).
Three examples that the Commentary and case law consistently treat as permanent homes:
- An owner-occupied apartment in Sofia with utility contracts, address registration, and furniture.
- A 12-month lease on a Sofia apartment, held by the taxpayer personally, with the right to renew and no sub-let clause.
- A family home in which the taxpayer's spouse and children live, even if the taxpayer travels frequently.
Three examples that are generally not permanent homes:
- A Marriott suite booked for a two-week business trip — not lasting.
- A friend's spare bedroom where the taxpayer stays occasionally — no legal right, not lasting.
- An Airbnb booked for a single month — not lasting, single-purpose.
What "Available" Means
The key adjective in Article 4(2)(a) is "available". The home must be available to the taxpayer for personal use at any time on a continuous basis. "Available" is not a synonym for "owned":
| Scenario | Available? | Reason |
|---|---|---|
| Owner-occupied home, empty for 3 months while on sabbatical | Yes | Right to occupy at any time; availability is not interrupted by temporary absence |
| Owned home let on a 3-year commercial lease to an unrelated tenant | No | Tenant has exclusive possession; owner cannot use during the lease |
| Owned home offered on a short-term rental platform "when not in use" | Usually yes | Owner retains the right to block out dates and use the home |
| Owned home used only two weeks a year for holidays, otherwise closed | Case-dependent | May not be a "genuine place of residence" per Commentary; depends on overall pattern |
| 12-month lease with taxpayer as lessee, with a break clause but no sub-let | Yes | Lasting legal right of occupation |
| Room in parents' house, no lease, no rent paid | Case-dependent | Depends on national case law; revenue authorities sometimes treat this as available |
| Corporate apartment belonging to employer, allocated to the individual for their use | Yes | Individual has right to use on continuous basis (OECD Commentary explicitly includes this) |
The Old-Country Home: Sell, Lease, or Keep?
For a Bulgarian relocation, the three practical options for the departing country's home are:
Option A — Sell
Cleanest. Permanent home in the old country is removed from the analysis entirely. Check the old country's capital-gains rules on sale (may apply regardless of residence, under the source-state rule for real estate). The sale closes the OECD first test and leaves no loose ends.
Option B — Long-term commercial lease
Second cleanest. A long-term lease to an unrelated tenant (typically 2-3 years or longer, with a third-party tenant in actual occupation, no reserved-use clause for the landlord) surrenders availability for the lease period. The home is not "available" to the owner during the lease term. Most European revenue authorities accept this in practice, provided the lease is genuine (proper rent at market, third-party tenant, documented).
Option C — Keep empty "for visits"
Worst option. An empty home preserves availability and preserves the old country's permanent-home claim. Revenue authorities routinely win contested residence cases on exactly this fact pattern. Avoid.
Short-term-rental-when-not-in-use (Airbnb the empty flat): does not usually solve the availability problem. The owner retains the right to block out dates, and the home is available to the owner on those dates. If Airbnb-style use is the only form of letting, assume the old-country permanent home is still "available" to the taxpayer.
Securing the Bulgarian Permanent Home
To establish the Bulgarian side of the analysis, aim for one of the following configurations:
- Long-term Bulgarian lease — typically 12 months or longer, with the lessee being the taxpayer (or the taxpayer's family), rent at market, utility contracts in the lessee's name, address registration at the premises.
- Bulgarian property ownership — deed, electricity and water in owner's name, address registration, furniture.
- Family-occupied home — if the spouse and children live in a Bulgarian home full-time, that home is a permanent home of the taxpayer as well, even if the taxpayer travels frequently.
Avoid: pure Airbnb / short-stay chains with no dedicated dwelling; co-living-only arrangements; "coworking as address" setups; Bansko / Plovdiv winter-only arrangements paired with a retained home in the departure country.
Case-Law Patterns
European tax courts applying OECD-modelled tie-breakers have produced a consistent pattern across jurisdictions:
- The "empty family home" line of cases: revenue authorities have repeatedly prevailed where the taxpayer claimed non-residence but kept a family home empty "for visits". The courts consistently treat that home as available.
- The "sub-let to spouse's relatives" line: informal or family arrangements that allow the taxpayer to recover possession at short notice are not genuine long-term leases.
- The "both permanent homes" line: where both countries' tests are met, the analysis moves to centre of vital interests and habitual abode — and family, business management, and social ties typically carry the decision.
- The "corporate apartment" line: OECD Commentary and national cases treat an employer-provided apartment available for the individual's continuous use as a permanent home of the individual.
Our role when advising on a Bulgarian move is to plan around these patterns: close the old-country home cleanly, document the Bulgarian home properly, and make sure that if centre of vital interests ever becomes relevant, the underlying substance already supports the Bulgarian side.
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- Bulgarian side: lease or deed in your name; address registration; electricity, water, internet contracts in your name; home insurance; delivery records showing mail received at the address; photographs of the furnished home.
- Old-country side — sold: sale contract, transfer of title, proceeds received.
- Old-country side — long-term leased: lease agreement with third-party tenant, rent deposits, tenant's address registration at the property, agent's management contract where relevant.
- Avoid: empty homes, informal family arrangements, Airbnb-only use with owner blocks, short-term rentals replacing a permanent dwelling, multiple home-like addresses with none clearly primary.
Frequently Asked Questions
What is a permanent home under the OECD Model?
Does ownership matter?
Is an Airbnb or short-term rental a permanent home?
What if I keep my old-country home empty for visits?
What about a holiday home?
What counts as "available" to me?
Can both countries have a permanent home for me?
How does Bulgaria handle the test in practice?
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Book Free Consultation →Disclaimer: This article is general information about the OECD Model Tax Convention and national case-law patterns. Actual treaty wording and interpretation vary by jurisdiction. Last updated: April 17, 2026.