The Concept of “Economic Presence” for the Taxation of Cross-Border Corporate Income in the OECD Area of Activities

For several years, the OECD has been conducting analyses to adapt the taxation model of cross-border corporate income. This is in response to changing strategies for entering foreign markets, especially for digital economy companies that may not require a physical presence in the expanded market country. The paper examines the new nexus based on the concept of “economic presence” in the light of the erosion of the permanent establishment in the digital economy. Its main purpose is to assess the consequences of the introduction into international taxation of a mechanism that allows a source country to tax the income of a foreign company in the absence of traditional, “physical” manifestations of the presence of such a company in that country.