Document Type


Publication Date



This article examines HM Treasury’s proposal to account for the active participation of users in value creation in certain digital platforms. The first key question is whether there is any reason to believe, as HM Treasury suggests, that users only meaningfully or actively contribute to value creation in the context of certain digital platforms. The article accordingly explores the factors HM Treasury sets out for the attribution of income to active user participation, including features such as network effects, multisided business models, and a lack of physical presence in the jurisdiction of the user. It concludes that if a user participation concept were adopted into international tax norms, it is unlikely to be limited to digital businesses or to the business models particularly highlighted in the proposal issued by HM Treasury. The analysis proceeds by considering the factors set out by HM Treasury for the attribution of income to active user participation in the context of pharmaceuticals and biologics, the financial sector, and the “internet of things”. For example, the article concludes that under HM Treasury’s user participation theory, returns from certain London-based financial intermediation businesses would need to be reallocated to other jurisdictions. Moreover, as the internet of things develops, one would expect the range of business affected by the active user participation concept to constantly expand.

Publication Citation

“This material was first published by British Tax Review / Maxwell and Sweet Limited in Itai Grinberg, User Participation in Value Creation, 2018 B.T.R. 407, and is reproduced by agreement with the Publishers.”