Taxing digital activities - III. Non-fiscal law requirements

Author: Paul Verhaeghe

  1. Tax distortion that is triggered or facilitated through digital activities had better be addressed through new definitions (free services, users, data and the worldwide profit derived through them, Virtual Permanent Establishments) in the Union tax law and OECD.

But, as pointed out, negotiating and voting addendums to the existing tax treaties to insert these new tax law definitions, might take up a very long period of time. A unilateral taxation may, on the other hand, be questioned in court as long as these addendums do not take effect.  Tax revenue may have to be reimbursed if such a claim prevails.

Hence the scope of this article: to seek a way around this temporary obstacle through non-tax law requirements of presence that may in turn give cause to apply existing Permanent Establishment criteria.

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