Wolfgang Schoen

The Distinct Equity of the Debt-Equity Distinction

The author, against the background of the debate on this issue, attempts to provide some explanations for the enduring existence of the debt-equity distinction, disentangle the issues relevant for different areas of tax law and make proposals for a reinvigorated application of the underlying concepts. Ultimately, the dividing line between debt and equity should follow the teleology of the underlying tax issues in individual, corporate and international income taxation, respectively.

Ten Questions about Why and How to Tax the Digitalized Economy

Much work has been done by international organizations, tax scholars around the world and business experts on the future shape of the taxation of the digitalized economy. Starting from the assumption that any “ring-fencing” of the digitalized economy should be avoided, it is far from easy to develop a framework in the context of the corporate income tax to capture profits derived by cross-border digital transactions in an orderly way. General notions like “economic allegiance”, the “benefit principle” or “digital presence” are unhelpful when it comes to sharing the pie between production countries and destination countries. Empowering the market countries can follow two different trajectories: a set of rules based on the notion of “digital presence” which simply looks to the demand side of the market, or a set of rules based on the notion of “digital investment” as a proxy for a productive source of income set-up by the taxpayer in regard of the market. While these pathways should be explored in the next couple of years, any search for a “quick fix” might not only be distortive and inefficient, it might also stand in the way of a new international consensus built around a new set of overall tax principles. Temporary measures might easily translate into permanent measures. Anybody who attempts to introduce specific tax treatment for the digitalized economy should be as transparent as possible with regard to the ten major policy questions outlined in this article.

Regulation and Taxation of the Financial Markets

The financial crisis has generated a high degree of legislative activity both in the area of substantive and procedural financial regulation and in the area of taxation of the financial sector. This article explores criteria for legislative choice (in particular for the European Union) when a given target can be addressed both by regulatory means and by fiscal burdens. Major examples include the (1) choice between capital requirements for financial institutions and the introduction of bank levies, (2) substantive constraints for executive compensation versus a “bonus tax”, and (3) the relationship between the existing European regulatory regime of financial markets and the current project of a “financial transaction tax”. While bank levies can play a meaningful role alongside capital requirements, both the “bonus tax” and the “financial transaction tax” seem less attractive than alternative regulatory options.