What tax risks are associated with international business activities?
March 28, 2024 | 55,00 EUR | answered by Siegfried Strauss
Dear Mr./Ms. Tax Advisor,
I am Anneliese Altmann and I run a medium-sized company in the automotive industry. Over the past few years, we have expanded our business internationally and now sell our products in multiple countries worldwide. In doing so, we are faced with various tax regulations and rules that are increasingly unsettling for us.
Our business activities abroad have led to a multitude of tax-related questions that we would like to clarify. We are aware of the complexity of international tax law and want to ensure that we fully understand all tax risks associated with our international business operations.
Our biggest concern is that we may inadvertently violate tax regulations or fail to implement them correctly, leading to legal consequences and financial losses. Therefore, we would like to know from you what specific tax risks are particularly relevant in international business operations and how we can minimize these risks.
What tax pitfalls should we be aware of in our international business operations? Are there specific tax risks that we may have overlooked so far? And what measures can we take to avoid potential tax issues?
We would appreciate receiving concrete recommendations and solutions from you so that we can optimize our international business activities in terms of taxes and ensure legal compliance.
Thank you in advance for your support and expertise.
Sincerely,
Anneliese Altmann
Dear Mrs. Altmann,
Thank you for your inquiry and your trust in my expertise as a corporate tax advisor, especially in the area of international business activities. I am pleased that you are aware that tax regulations are particularly complex when it comes to international activities and that you want to ensure that you fully understand all tax risks.
In international business activities, there are indeed a variety of tax pitfalls that companies should be aware of in order to avoid legal consequences and financial losses. One of the most important aspects is the issue of permanent establishments and the associated tax obligations in the countries where you operate. For example, if you have a fixed place of business in another country, this may lead to a tax liability in that country.
Another important point is transfer pricing, i.e. the prices at which goods and services are exchanged within a company between related entities. These prices must be at arm's length to avoid potential tax issues. Additionally, you should ensure that you comply with all international tax regulations and agreements to avoid double taxation.
It is also advisable to familiarize yourself with the tax regulations regarding transfer pricing documentation in order to minimize potential risks related to transfer pricing documentation. Furthermore, you should also consider the tax aspects of financing your international activities to avoid potential tax pitfalls.
To avoid potential tax issues, I recommend seeking comprehensive tax advice to ensure that you consider all relevant tax aspects related to your international business activities. An experienced tax advisor can help you structure your business activities in a tax-efficient and legally compliant manner and provide you with specific recommendations and solutions.
I hope that my comments are helpful to you and I am happy to assist you with any further questions.
Best regards,
Siegfried Strauss
