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March 24, 2023

Report on recent US international tax developments 24 March 2023

The US Internal Revenue Service (IRS) issued Notice 2023-27 on 21 March, announcing that Treasury and the IRS intend to issue guidance related to the treatment of certain nonfungible tokens (NFTs) as collectibles for tax purposes. Pending the issuance of that guidance, the IRS intends to determine whether an NFT constitutes an Internal Revenue Code1 Section 408(m) collectible by analyzing whether the NFT’s associated right or asset is a collectible, under a look-through analysis.

While some NFTs may represent a right or asset explicitly listed under Section 408(m), such as gemstones, other assets may require further clarification in the ensuing guidance. In particular, the IRS will make a determination on the extent to which a digital file may constitute a “work of art” under Section 408(m)(2)(A). Notice 2023-27 requests comments on specific questions, offering taxpayers the opportunity to provide technical input on future guidance.

Addressing BEPS 2.0, a senior US Treasury official this week said negotiations have been so challenging that he does not expect the Inclusive Framework (IF) will be able to craft a permanent safe harbor under the Pillar Two global anti-base erosion (GloBE) rules. Recent guidance provided for several temporary safe harbors that apply to the first three years that GloBE is in effect. On the other hand, the official was also quoted as saying that the IF is working on a qualified domestic minimum top-up tax (QDMTT) safe harbor that would eliminate an in-scope multinationals’ liabilities under the Income Inclusion Rule (IIR) and Undertaxed Profit Rule (UTPR).


For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC



  1. All “Section” references are to the Internal Revenue Code of 1986, and the regulations promulgated thereunder.

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