Whether it concerns balance sheets, controlling, or taxes, the digital transformation of corporate processes also requires appropriate appreciation of the legal component.
Taxation of digital markets
New business models that enable participation in sales markets without the need for an operational branch raise the question of how the digital economy will be taxed as traditional tax mechanisms are not effective. The introduction of new tax measures to prevent tax avoidance confronts companies with legal issues that have a major impact on their internal organization. Our tax law experts also advise on dealing with issues of digital, international markets and develop legally compliant implementation concepts for our clients.
Transfer prices are one of the risks that have practical relevance in tax law. This is primarily due to the fact that many value creation processes have been outsourced to increase efficiency and due to the introduction of a large number of new statutory provisions. The arm’s length comparison represents the biggest hurdle that requires the evaluation of a large amount of data and the analyses of databases. The digital transformation offers the opportunity to compute transfer prices more accurately. We support our clients in this task from the perspective of tax law.
Tax Compliance Management
With the taxation process becoming increasingly digitalized, the processing and recording of tax-relevant mass data is becoming ever more complicated. Therefore, the use of digital components in Tax Compliance Management Systems (TCMS) is almost inevitable, even for SMEs. We accompany our clients on TCMS introduction and advise on any open legal questions.
The increased use of information and communication technologies by companies has significant consequences in relation to income tax for digital business models in international tax law. In particular, there is a risk of double taxation because digital services are also considered the sale of assets or the provision of services from a German perspective. The problem, however, is that the digital services may also be subject to withholding tax under local law in other countries. We address this issue as part of our advisory services and work with our clients to develop ways to prevent such double taxation.