Corporate Income Tax Challenges Arising From Digitalised Business Models

44 Pages Posted: 1 Apr 2019 Last revised: 4 Apr 2019

See all articles by Georg Bauer

Georg Bauer

Ludwig Maximilian University of Munich (LMU)

Jil Fritz

Ludwig Maximilian University of Munich (LMU)

Deborah Schanz

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management)

Michael Sixt

Ludwig Maximilian University of Munich (LMU)

Date Written: March 7, 2019

Abstract

In this study, we investigate how digitalised business models cause tax challenges due to a deviation between the place of value creation and the place of taxation. Using 90 cases identified in the literature, we show how digital technologies change business models. Based on the cases we conduct a normative analysis in that we determine in which cases a deviation be-tween the place of value creation and the place of taxation occurs. We further conduct a cross-case analysis to determine common conditions leading to tax challenges. Our study suggests that divergence between the location of value creation and nexus occurs if (1) data is collected, (2) at a place at which neither one of the participating parties creates a nexus and (3) a product or service is offered based on the data, leading to additional income for the company.

Keywords: digitalised economy, BEPS, value creation, digitalised business models, tax challenges

JEL Classification: H21, H25

Suggested Citation

Bauer, Georg and Fritz, Jil and Schanz, Deborah and Sixt, Michael, Corporate Income Tax Challenges Arising From Digitalised Business Models (March 7, 2019). Available at SSRN: https://ssrn.com/abstract=3348544 or http://dx.doi.org/10.2139/ssrn.3348544

Georg Bauer

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

Jil Fritz (Contact Author)

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

Deborah Schanz

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management) ( email )

Ludwigstr. 28 RG IV
Munich, Bavaria 80539
Germany
+49 (0) 89 / 2180 - 3681 (Phone)
+49 (0) 89 / 2180 - 3874 (Fax)

HOME PAGE: http://www.en.steuern.bwl.uni-muenchen.de/index.html

Michael Sixt

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

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