User Participation in Value Creation

British Tax Review, 2018, Pp. 407

Posted: 28 Nov 2018

See all articles by Itai Grinberg

Itai Grinberg

Georgetown University Law Center

Date Written: November 1, 2018


This article examines HM Treasury’s proposal to account for the active participation of users in value creation in certain digital platforms. The first key question is whether there is any reason to believe, as HM Treasury suggests, that users only meaningfully or actively contribute to value creation in the context of certain digital platforms. The article accordingly explores the factors HM Treasury sets out for the attribution of income to active user participation, including features such as network effects, multi-sided business models, and a lack of physical presence in the jurisdiction of the user. It concludes that if a user participation concept were adopted into international tax norms, it is unlikely to be limited to digital businesses or to the business models particularly highlighted in the proposal issued by HM Treasury. The analysis proceeds by considering the factors set out by HM Treasury for the attribution of income to active user participation in the context of pharmaceuticals and biologics, the financial sector, and the “internet of things”. For example, the article concludes that under HM Treasury’s user participation theory, returns from certain London-based financial intermediation businesses would need to be reallocated to other jurisdictions. Moreover, as the internet of things develops, one would expect the range of business affected by the active user participation concept to constantly expand.

Keywords: Attribution of income, Corporate tax, Digital platforms, Digital economy, European Commission, Financial intermediation businesss, International economic law, International tax framework, Marketplace, Multinational corporations, Multinational businesses, Multisided business models, OECD

Suggested Citation

Grinberg, Itai, User Participation in Value Creation (November 1, 2018). British Tax Review, 2018, Pp. 407, Available at SSRN:

Itai Grinberg (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue NW
Washington, DC 20001
United States
202-661-6615 (Phone)

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