Tax Aspects of the Metaverse: Is a Pillar Three Coming?

Abstract

The metaverse and Web 3.0 are (again) going to change the digital economy and its business models as we know them and give rise to key issues from a tax perspective. It is thus expected that the current international tax principles, the tax challenges raised by OECD BEPS Action 1 for the digital economy and, more recently, Pillar One new taxing rights (which have yet to be implemented) could soon become outdated. This article illustrates, with the support of some examples, what the future challenges of international taxation might be – considering, among other things, the potential coexistence of the “old” principles under the OECD Model Tax Convention and Pillar One – and how the metaverse might have an impact on business models and the real world (including by considering the role and interactions of cryptocurrencies, NFTs and blockchain technology, which are key to the metaverse’s operations) with a focus on how taxing rights among the different countries involved in the metaverse are to be attributed.