The Physical, Human Driven Digital Economy: The Overvaluation of Intangibles and its Effects on Tax and Society

International Tax Studies (ITAXS), Forthcoming

39 Pages Posted: 16 Mar 2023

See all articles by Jan Winterhalter

Jan Winterhalter

University Leipzig; Weizenbaum Institute Berlin

Mariam Sattorov

Humboldt University Berlin

Lukas Seiling

University of Mannheim

Date Written: March 1, 2023


The common understanding of the digital economy is that it is mainly driven by data, technology, the network effect – or what we call intangibles. We argue against this perception of the digital economy.

Considering “intangibles”, “technology”, or even “robots” not simply as output of a genius or AI from the cloud but as output of the triad labour, data, and resources, we hypothesise that intangibles are overvalued, and auxiliary routine functions are undervalued. The potential reasons for this overvaluation include a lack of digital literacy even under experts, a biased valuation process, and tax evasion.

To test our claim of lacking digital literacy, we conducted a quasi-experiment in the form of an expert workshop, asking “what aspects create value for Data Acquisition, Data Storage, Data Analysis, Data Usage as stages within the value creation process for an Amazon Echo System?”, and, by doing so, letting experts create and evaluate a realistic use case from the digital economy. The results, although limited, show that when confronted with a more holistic idea of the value chain of the digital economy as it is commonly understood, participants shift relative value from intangibles to labour, indicating a bias towards the overvaluation of intangibles.

The potential negative impacts, such as inequalities and a monopoly driven innovation blockade, resulting from a potential overvaluation stress the necessity for further research. The main implication for international tax law and the discussion for its nexus is that even for an AI you might need a physical presence in the form of labour, data, and resources.

Keywords: International Taxation, Intangibles, Digital Economy, Monopoly, Inequality, Global Value Chain Analysis, Explorative Study

JEL Classification: K33, K34, M15, M16, P28, P33

Suggested Citation

Winterhalter, Jan and Sattorov, Mariam and Seiling, Lukas, The Physical, Human Driven Digital Economy: The Overvaluation of Intangibles and its Effects on Tax and Society (March 1, 2023). International Tax Studies (ITAXS), Forthcoming, Available at SSRN: or

Jan Winterhalter (Contact Author)

University Leipzig ( email )

Leipzig, DE

Weizenbaum Institute Berlin ( email )


Mariam Sattorov

Humboldt University Berlin ( email )

Lukas Seiling

University of Mannheim

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