A New Nexus Based on the Concept of Significant Economic Presence: The Digital Permanent Establishment

Abstract

The traditional concept of EP status is obsolete and enables digital companies to enter a foreign market jurisdiction without having a minimal physical presence. These companies usually do not reach the threshold required to establish the necessary taxable nexus to attribute the profits to that jurisdiction. For the purpose of realigning corporate taxation with the location of actual business activities, Action 1 Final Report relaunches the debate of a new nexus based on the concept of significant economic presence.