The issues surrounding international tax law are of great importance to all companies that invest abroad or do business in several countries. The list of issues starts with the appropriate VAT treatment, avoidance of double taxation, observance of a wide range of compliance obligations and the structuring of transfer prices. As specialist advisors for international tax law with many years of experience, we are pleased to offer you our support. We – which is to say, dhpg's advisors together with our colleagues in the CLA Global network in more than 100 countries.
As soon as a company generates income abroad, invests there or sends employees there, things become really interesting for us. We look forward to working with you to develop and implement tax strategies in international tax law. Thanks to our international network and the many years of experience of our advisors in the field of international tax law, we are ideally equipped for this and will always keep you abreast of developments.
In the design and implementation of international tax law, tax and legal issues often go hand in hand. It's good to have a partner who can clear up all unresolved questions beforehand. That is how we always find the best solution for you.
Would you like to have a personal meeting or do you have any questions about international tax law? We would be happy to arrange an appointment with you – no commitment necessary on your part – so that we can get to know each other. We look forward to your call or e-mail and to meeting you.
Constructive tax planning always starts with the business model. In order to be able to design the suitable tax structure, we first perform a deep-dive to gain an in-depth understanding of the corporate strategy and the relevant value chain. It is on this basis that the legal form, the functional and risk profile, financing and capitalisation of the respective legal entities can be optimised from a tax perspective. Once these preconditions have been put in place, the next step is to draw up the rules for setting prices (transfer prices) for intra-group supplies and services. Once this stage has been completed, there is nothing more standing in the way of expansion of your business abroad from a tax perspective.
Double taxation in the economic meaning of the term is the case when the income of a company or group of companies is taxed in more than one country without (full) compensation in the other country. In principle, double taxation agreements (DTAs), which the Federal Republic of Germany has concluded with a large number of other countries, ensure that double taxation can be avoided by, for example, laying down the rules for tax residency, establishing delimitation criteria for the existence of a permanent tax establishment and by delimiting taxation rights between the source state and residency. Nevertheless, there are also some gaps on the "DTA map".
In actual practice, there is a risk of double taxation particularly if transfer prices are subsequently corrected by the tax authorities in one country, resulting in tax adjustments to profits. If such a correction is justified based on the arm's length standard, the other respective country is generally obliged to undertake a counter-adjustment in accordance with double taxation agreements. However, arriving at an adjustment and thus prevention of double taxation contrary to the agreement is often a long, rocky road leading through international mutual agreement or arbitration proceedings. We will be happy to support you in the preparation, monitoring and implementation of such proceedings.
Tax registration and reporting obligations vary from country to country and are highly individual. The one-off registration of a subsidiary or permanent establishment is usually not enough, however. After this is completed, there are obligations to submit tax registrations and tax returns as well as to report other transactions of relevance to taxes. In many cases, individual transactions such as the conclusion of licence and loan agreements, the distribution of profits or the secondment of employees are subject to separate notification and approval. Only advisors who have a local network and are familiar with national (and sometimes regional or local) regulations and experienced in dealing with government agencies can provide reliable support. Our colleagues in the CLA Global network are the right partners to guide you safely through any tax compliance maze.
As is so often the case, there is no blanket answer having universal validity to this question; rather, it depends on the particularities of the corporate and shareholder structure as well as the individual business model. On the one hand, the tax treatment of permanent establishments has been gradually aligned with the taxation of legally independent entities in recent years; for taxation purposes, the independence of a permanent establishment is often fictitious; the same principles apply when determining transfer prices, for example. On the other hand, the absence of legal independence on the part of the permanent establishment continues to have a tax effect, because the permanent establishment and the parent company cannot conclude contractual agreements with each other under civil law. This has an impact, for example, on the way profits are determined for tax purposes, the demarcation and allocation of functions, risks and assets, as well as the question of whether certain kinds of remuneration can be subject to a withholding tax deduction.
Double taxation agreements, foreign investments, reporting requirements, corporate structures, transfer pricing and employee secondment – each of these building blocks in an internationalisation strategy has an impact on a company's tax burden. Our expert advisors for international tax law and our CLA Global partners in more than 120 countries around the world will help you develop effective concepts and will be glad to assist you in their implementation.