Sharon Chen

Summary

My research topic is Cross-Border AI Licensing and Royalty Classification: Rethinking International Tax Rules for API Access, Model Licensing, and AI-Driven Services.

AI companies increasingly monetize their technology through API access, model licensing,
subscription-based services, and usage-based pricing. These models generate cross-border payments
that do not fit neatly within treaty categories such as royalties, technical services, or business
profits. Existing treaty wordings were drafted for static, human-led software and location-based
value creation, not for automated inference, cloud-based model delivery, or AI-generated outputs.
As a result, tax authorities struggle to determine whether payments for AI model access constitute
use of copyright, use of equipment, automated digital services, or a hybrid category not
contemplated by current treaties. Divergent OECD and UN approaches and AI's reliance on
distributed server infrastructure further increase interpretive uncertainty and the risks of double
taxation/non-taxation, and tax planning based on contractual structuring or server location.

Against this backdrop, the dissertation develops a doctrinal framework for classifying cross-border
AI-related payments. Paper 1 analyses the legal nature of Income arising from AI models by
proposing a taxonomy of AI-related rights—model weights, training data rights, inference rights,
and deployment rights—and assessing whether API access is “use of copyright,” whether inference
is “use of equipment,” whether fine-tuning transfers IP, and whether AI outputs qualify as
automated services. Paper 2 evaluates the limits of the OECD and UN Model Conventions for
income arising from AI models by analysing the relevant treaty articles and their applicability to
modern AI transactions. Paper 3 proposes new treaty provisions for AI-based transactions,
examining whether a dedicated article is needed, how taxing rights should be allocated, and how to
prevent double (non) taxation. The Introduction will present the context, article summaries, and
methods. Together, the papers provide a unified framework for future treaty reform.

Profile

Researcher info

Institution

University of Helsinki

Department/faculty

Law

Contact information

sharon.hh.chen@helsinki.fi
+358458727580

Keywords
ai-related income