Allocation of the Right to Tax Income from Digital Intermediary Platforms – Challenges and Possibilities for Taxation in the Jurisdiction of the User

Nordic Journal of Commercial Law, Issue 1, pp. 146-172, 2018, DOI: 10.5278/ojs.njcl.v0i1.2488

Copenhagen Business School, CBS LAW Research Paper No. 19-03

Posted: 16 Dec 2018 Last revised: 8 Jan 2019

See all articles by Peter Koerver Schmidt

Peter Koerver Schmidt

Copenhagen Business School - CBS Law

Louise Fjord Kjærsgaard

Copenhagen Business School

Date Written: November 24, 2018

Abstract

The authors analyse the current (lack of) possibilities for user-jurisdictions to tax the value generated by the increased use of digital intermediary platforms. Focus is on analysing the possibilities for user-jurisdictions to tax the remuneration received by a foreign enterprise owning a digital intermediary platform and on discussing whether the users’ provision of personal data in exchange for access to the platform could be considered a barter transaction for tax purposes in the user-jurisdiction. Among other things, it is concluded that user-jurisdictions, pursuant to current international tax treaties, will normally be precluded from taxing the income of foreign platform enterprises, as the platform enterprises are often able to deliver their digital services remotely. Against this background, a number of tax policy challenges and options of relevance for taxing platform enterprises are discussed, in particular the proposed directive on significant digital presence recently put forward by the European Commission. It is concluded that the proposal may prove to be an adequate step towards taxation in the user jurisdictions, even though the proposal needs further work in order to become sufficiently clear and targeted and the scope may be limited.

Keywords: Digital intermediary platforms, international tax law, jurisdiction to tax, user participation, tax treaties

Suggested Citation

Koerver Schmidt, Peter and Kjærsgaard, Louise Fjord, Allocation of the Right to Tax Income from Digital Intermediary Platforms – Challenges and Possibilities for Taxation in the Jurisdiction of the User (November 24, 2018). Nordic Journal of Commercial Law, Issue 1, pp. 146-172, 2018, DOI: 10.5278/ojs.njcl.v0i1.2488 ; Copenhagen Business School, CBS LAW Research Paper No. 19-03. Available at SSRN: https://ssrn.com/abstract=3290040

Peter Koerver Schmidt (Contact Author)

Copenhagen Business School - CBS Law ( email )

Porcelaenshave 18B, 1
Frederiksberg 2000
Denmark

Louise Fjord Kjærsgaard

Copenhagen Business School

Solbjerg Plads 3
Frederiksberg C
Denmark

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