TAX COMPLIANCE AND TAX RISK MANAGEMENT
Legislative activity, easier checks and inspections by tax authorities and law enforcement agencies, as well as stricter legislation on compliance issues are all increasing the responsibility of businesses, and the persons acting on their behalf, in terms of tax compliance and tax risk management. The key regulations here are those concerning regulatory offences (sections 30, 130 German Act on Regulatory Offences [OWiG]), fiscal offences (sections 370, 378 German Federal Fiscal Code [AO]) and tax and civil liability (section 69, 71 AO), and section 43 German Limited Liability Companies Act [GmbHG] section 93 German Stock Corporate Act [AktG]).
Both the tax authorities and jurisprudence now consider compliance measures as grounds for minimisation of liability. In the long term, no company will therefore be able to simply ignore the need for a tax compliance management system.
The primary purpose of a functioning tax compliance system is to avoid accusations of the violation of obligatory supervision, as defined in section 130 OWiG. Provided that this purpose is achieved, managers cannot be held personally or criminally liable. The implementation of an internal control system (ICS) in a company, which system controls and monitors the due fulfilment of all tax requirements, is therefore essential. There are no statutory requirements governing the form of such an ICS or tax compliance management system (TCMS), and this is unlikely to change in the future. The Institut der Wirtschaftsprüfer (IDW) has, however, published details of how such a system should be structured in its Praxishinweis 1/2016, which offers practical guidance on structuring a TCMS in accordance with the IDW PS 980 auditing standard.
The implementation of a TCMS frequently poses a major challenge for businesses, and they do not know exactly where to begin. In our view, the most important thing is to actually begin.
The KMLZ approach to tax compliance takes account of the following aspects:
- We want to give businesses an effective but uncomplicated TCMS.
- This is only possible in partnership with the management and staff, because only they are familiar with the company’s processes and how the company operates.
- Expensive complete IT TCMS solutions are not generally necessary. Complete solutions may be introduced later, if required, as an addition to existing procedures once the TCMS is up and running.
- The TCMS must be practicable if it is actually to be followed in practice. All regulations agreed as part of TCMS implementation are to be judged on their practicability.
- A TCMS that is not followed in practice is not worth the cost and effort, as it cannot fulfil its purpose (ensuring correct behaviour and avoiding management liability).
KMLZ proceeds as follows to develop and implement a TCMS:
Effective project management
We have an established project team that can plan and rapidly deal with all work involved in designing and launching a TCMS. This team consists of experts in VAT, criminal law and IT. Our projects are managed by Prof. Dr. Thomas Küffner, an experienced certified public accountant. We do not impose a standard TCMS on your business. Instead, we work with you to develop a customised TCMS that meets professional standards.
To ensure that your TCMS is implemented on time and within budget, we manage projects on the basis of an established project management plan. We use project management software with fixed milestones and report to the competent steering group.
Our firm is certified for tax consultancy in accordance with EN ISO 9001 and holds the quality seal from the German Association of Tax Advisers (DStV-Qualitätssiegel). In short, we know what we’re talking about.
Lawyer, Certified Tax Consultant,
Certified Public Accountant
Phone: +49 89 217501230