Tax risks in investments
the devil is in the detail
With the right “flight altitude”, you can quickly recognise whether an investment allows quick access, or whether there are potential risks in the way. Investments in new assets or investment structures often involve complex tax issues as they are linked to existing structures. Tax insurance is an efficient tool for the efficient outsourcing of risks – therefore enabling fast and risk-limited investments.
Example: hedging tax risks in corporate reorganisations
In corporate groups, organisational structures are dynamically adapted to the requirements of the business – and quite often tax considerations are not taken into account, simply because they are not apparent to non-tax experts or locally engaged tax advisors, or are unintended. In a subsequent audit by the tax authorities, however, this would be irrelevant, meaning that significant liquidity outflows and liability issues could arise.
Typical practical cases: Legal uncertainties in relation to taxes for
- Transferring of specific business activities or assets, which may be considered a so-called partial business (“Teilbetrieb”);
- Reorganisation of distribution structures that trigger tax compensation payments
- Reorganising sales structures that trigger tax compensation payments
- Concluding internal financing agreements where it is unclear whether these constitute equity or debt capital
