Tax risks in conception
Always thinking one step ahead
Conception of tax structures requires a far-sighted approach to ensure all tax risks are analysed at an early stage and the best “flightpath“ is chosen. Tax risks identified in the planning phase can have significant impact on subsequent steps, structures, the projects or transaction itself. Tax insurance can cover future risks as an alternative to requesting binding rulings from tax authorities.
Example: Proactive calculation of tax risks in financial planning or business forecast
For financial planning or forecasts, it is essential to clearly define the calculation parameters so as to make statements about the profitability of investments and cash flows. However, there are cases where calculating with the maximum tax risk due to legal uncertainty, makes the investment unprofitable. In such cases, insurance premiums can be requested for each of the available alternative scenarios, which can be priced into the calculation as a one-off amount, to cover the risk of a potentially higher tax liability.
Typical practical case:
Legal uncertainty with regard to the applicability of the withholding tax exemption under the applicable Double Tax Treaty, the Parent-Subsidiary Directive or national law, or with regard to the sufficient tax substance of the recipient of the payment (especially in the case of asset-managing companies or holding companies).
