Tax issues relating to your sustainability strategy Tax issues relating to your sustainability strategy Tax issues relating to your sustainability strategy

Climate protection and sustainability as represented by ESG are becoming more important both in politics and in society generally, and they also impact some areas of taxation: not just under the “governance” heading, but also the “environmental” and “social” headings too. 

With the Green Deal and various packages of tax measures in the EU, environmental taxes are a challenge for tax departments, covering not only the CO2 tax, but also the plastic tax – for companies which operate internationally, even if it has not yet been implemented in Germany at present – as well as the Carbon Border Adjustment Mechanism (or CBAM). The different implementation of the tax laws within the EU, as well as in other third countries, makes it even more difficult to become and remain compliant (governance). 

In addition, there are ever stricter reporting burdens being imposed on companies too. With the introduction of the GRI 207 “Tax” Standard, companies that report under the GRI Standard have already had to adapt to an extension of their reporting requirements and disclose tax details in their sustainability report. The EU is now taking the next step and is planning mandatory reporting for companies with a turnover of over EUR 750 million starting in 2025/26, known as the "Public CBCR". In addition, rating agencies are increasingly looking at ESG topics, and also look at tax policy as part of this. This drives ESG-initiated changes in the supply chain forward. Restructuring the supply chain in turn can have other knock-on effects on transfer prices respectively the transfer pricing model, as well as on indirect taxes and customs duties.

The flexibilization of international work options is also keeping tax departments busy. The Corona pandemic has made this topic - keyword home office - more relevant. “Work from Anywhere” touches on a multitude of topics such as payroll tax including travel expense reports, social security, work permits, and also the risk of establishing a permanent establishment. As a result, many compliance rules need to be examined very closely. However, this also has an impact on social aspects and - by saving travel to the workplace - the environment.

Can you calculate the tax burden resulting from your company’s CO2 footprint?

Do ESG-related measures already form part of your sales strategy? If so, how do you recharge these costs within the group?

What measures should you take to get an overview of how your business ranks for ESG?

To what extent is the topic of sustainability involved in your considerations or strategies for moving to more flexible and mobile working patterns?

Our tax experts can analyse with you what the impact is for your company. We do this while keeping in mind the legislation in both EU member states and third countries that are relevant for you. The goal is to establish sustainable processes  - whether in the area of environmental taxes, transfer prices, required reporting or your employees.

Analyse how you are affected, and implement processes for correct reporting and payment of these taxes

Consultancy on documentation for reporting and transfer pricing, as well as on customs issues arising under CBAM

Developing and implementing a tailored strategy for global employee mobility