Taxing Collaborative Software Engineering

Reviewed by Greg Wilson / 2023-04-17
Keywords: Computing and the Law

Our field needs more papers like this one: a short, readable introduction to a complex topic (international tax law) for programmers who know nothing about it (like me) but whose work it might directly impact. I'd never heard of the Arm's Length Principle before, but after spending 15 minutes with this paper I have at least a glimmer of an understanding of the issues involved. I'm going to include this paper in the next software engineering class I teach, and would be grateful for pointers to others like it.

Michael Dorner, Maximilian Capraro, Oliver Treidler, Tom-Eric Kunz, Darja Šmite, Ehsan Zabardast, Daniel Mendez, and Krzysztof Wnuk. Taxing collaborative software engineering. 2023. arXiv:2304.06539.

The engineering of complex software systems is often the result of a highly collaborative effort. However, collaboration within a multinational enterprise has an overlooked legal implication when developers collaborate across national borders: It is taxable. In this short article, we discuss the unsolved problem of taxing collaborative software engineering across borders. We (1) introduce the reader to the basic principle of international taxation, (2) identify three main challenges for taxing collaborative software engineering, and (3) estimate the industrial significance of cross-border collaboration in modern software engineering by measuring cross-border code reviews at a multinational software company.