The introduction of EUV lithography into the semiconductor fabrication process will enable a continuation of Moore’s law below the 22 nm technology node. EUV lithography will, however, introduce new and unwanted sources of patterning distortions which must be accurately modeled and corrected on the reticle. Flare caused by scattered light in the projection optics is expected to result in several nanometers of on-wafer dimensional variation, if left uncorrected. Previous work by the authors has focused on combinations of model-based and rules-based approaches to modeling and correction of flare in EUV lithography. This paper focuses on the development of an all model-based approach to compensation of both flare and proximity effects in EUV lithography. The advantages of such an approach in terms of both model and OPC accuracy will be discussed. In addition, the authors will discuss the benefits and tradeoffs associated with hybrid OPC approaches which mix both rules-based.