| Indicative exoneration effect Can a TCF protect me from criminal tax charges? A TCF provides an indication for a possible exoneration of management or senior employees in the context of criminal tax proceedings. With the implementation of a TCF, an indirect commitment is made that management will tackle tax processes so that tax errors are avoided. Therefore, the TCF is a resilient asset in refuting the allegation of a tax offence. |
| German Federal Ministry of Finance § 153 AO | AS 980 issued by IDW [German Institute of Public Accountants] | COSO/OECD How can I be sure that I have a resilient Tax Control Framework? For German companies, the TCF should be based on the statement from the German Federal Ministry of Finance covering § 153 AO, AS 980 issued by the German Institute of Public Accountants and the corresponding practice note. For internationally oriented companies, international regulations (COSO and OECD) and local foreign requirements should also be taken into account. |
| Certification Does my TCF have to be certified in order to have an exonerating effect? In our opinion, a TCF must be appropriate and effective in order to achieve an exonerating effect. There is no certification, such as is the case with an ISO standard, for example, but a certification by an auditor does enhance the TCF and gives it more evidential weight. |
| Factual obligation Is the implementation of a TCF optional or mandatory? There is no legal obligation to implement a TCF. Rather, the advantages mentioned above outweigh the disadvantages (in particular, with regard to the liability of the managing bodies and the establishment of a trusting relationship with the tax authorities), so that implementation is expressly recommended. |
| Correction of tax returns Can tax returns be corrected without penalty in accordance with § 153 AO more easily with a TCF? The correction of a tax return (without penalty) pursuant to § 153 AO has become a somewhat controversial topic in recent years, not least due to the statement by the German Ministry of Finance dated 26 May 2016 (Application Decree regarding 153 AO). We observe that the correction of a corresponding tax return meets with less resistance from the tax authorities when a reliable TCF is in place. |
| Asset and creditor protection Does the TCF also protect the interests of shareholders, stakeholders and creditors? A robust TCF can protect your business from financial risks and reputational damage. Therefore, by implementing a TCF, you can safeguard the asset protection interests of shareholders, stakeholders and creditors. |
| Value enhancement Will the value of my company be enhanced by a Tax Control Framework? By implementing a TCF, you enhance the value of your company. A TCF can enhance the value of the company (intangibly), as the TCF can be used to structure company processes in a legally secure and efficient manner. A TCF also has a positive influence on any possible tax due diligence, as the TCF minimises tax risks and thus also the risk of additional tax payments. Consequently, the implementation of a Tax Control Framework is an investment in your company. |
| Simplifications during a tax audit Does a TCF have an impact on my tax audits? The existence of a robust TCF makes it more and more easy to control tax audits. Tax auditors are increasingly asking whether there is a TCF in place and are taking the existence of a TCF into account in determining the depth of the audit, but also when considering possible prosecution and assessing penalties. |
| Tax advisor as part of your Tax Control Framework Why do I need a Tax Control Framework if I have engaged a tax advisor? By outsourcing activities to a suitable tax advisor, you achieve a much higher level of tax assurance, which enhances your TCF. However, your in-house processes must be geared towards ensuring that your tax advisor receives the required information/issues and documents in a timely and complete manner. This means that your organisational structure and procedures should be documented in a structured manner to ensure that information is passed on in a timely and complete manner. Therefore, external tax advice cannot replace a Tax Control Framework. |
| Company size From which company size does a Tax Control Framework make sense? We recommend implementing a TCF regardless of the size of the company. Although the size influences the scope of a TCF, it does not call into question its usefulness. |
| Clustering within the group Do I have to implement a TCF for each individual subsidiary? In principle, yes. However, efficiencies in the implementation and maintenance of a TCF can be achieved by clustering companies with comparable structures (e.g. processes, responsibilities, ERP systems). This can be considered particularly in the case of a centralised organisation. |
| Tax Control Framework per tax type Can I also implement a Tax Control Framework for individual types of tax? A TCF can be implemented for individual tax types. It is advisable to start with those tax types that are particularly susceptible or have already led to findings in tax audits. Please note that in the event of criminal tax proceedings, the TCF will only have a possible exonerating effect on the tax types included in the TCF. |
| Digital Tax Control Framework /Digitalisation Strategy Can a TCF be digitally supported? Without a doubt. A success factor for a tailor-made TCF is the individual and in-depth examination of the existing technological structures. A TCF must be integrated in such a way that technologies reduce the workload involved in monitoring risks and measures. Therefore, with a digital TCF, you are setting yourself up for the future. The implementation of a (digital) TCF can therefore be the initial starting shot for both the implementation and the planning of a digitalisation strategy. What is essential is a tax function that is equipped for the future. The implementation of a (digital) TCF can be the initial starting shot for the implementation or planning of a digitalisation strategy. Our goal: a tax function that is ready for the future. |
| It won't work without you Can the TCF advisor implement a TCF without the involvement of the client? The quality of the advisory services increases significantly with your involvement. The different consulting packages (Basic, Comfort, Premium) allow you to commission varying scopes of our services. However, without your company-specific and process-oriented know-how, the successful implementation of a resilient TCF cannot succeed. After all, only you know your company best. |
| Agile TCF Do I need to continue to care for my TCF after implementation? Because your company's internal organisational structures and tax law are constantly evolving, a TCF must be regularly reviewed to ensure that it remains up-to-date and efficient. We do not produce a TCF to keep it in the drawer - it must therefore not only be implemented, but rather sustainably practiced. |
