Medium-term Recommendations

Your contact: Wilhelm Dolle, Partner, Consulting, Head of Cyber Security

More information available here.

How and to what extent can losses from investments or loans in Russian subsidiaries be used for accounting purposes?
How are currency effects from the drastic devaluation of the rouble treated for income tax purposes?
How can costs and losses from any crisis-related terminations of business relationships with Russian companies be used for income tax purposes?
Is there a risk that the double taxation agreement between Germany and Russia will be annulled and how would this affect my company?

Your contact: Lars Christian Mahler, Partner, Head of International Transaction Tax

What are the effects of the sanctions against Russia on cross-border financing and payment flows?
Are any adjustments required to the existing transfer pricing model or the underlying contracts due to the effects of war (e.g. supply chain disruption)?
Will ongoing (advance) mutual agreement procedures (APAs and MAPs) between Russia and Germany be continued? Can new applications be submitted at this time?

Your contact: Michael Freudenberg, Partner, Tax, Head of Global Transfer Pricing Services in Germany

Against the backdrop of the Ukraine conflict, banks/external financiers are critically examining the following points for borrowers

Do any delivery and/or customer relationships exist with Russia or Ukraine?
How is the company affected by material price increases and can they not be fully passed on to customers?
Is the supply chain reliably stable, especially with regard to logistics and availability of parts or materials?
How robust is corporate planning with regard to rising interest rates potentially caused by price inflation due to the crisis?

The following questions are now important for borrowers

Is there any risk of non-compliance with the provisions in the loan agreements?
Do any significant loans fall due within the next 12-18 months or are there any important bank talks pending?
Is it necessary to make any revisions to the medium/long-term corporate planning known to the banks?

Your contact: Thomas Dorbert, Deal Advisory, Head of Debt Advisory Germany

How should your company realign IT demand to compensate for failures of nearshore centres in Eastern Europe and other risks of local relocation?
How is your company increasing the resilience of its IT organisation?
How is your company redesigning its IT operating systems?
How is your company preparing for medium-term changes in nearshoring and offshoring?

Your contact person: Gernot Gutjahr, Partner, Consulting, Head of CIO Advisory

Access more information on legal questions here.

Your contacts:

Dr. Dr. Boris Schilmar, Partner, Head of International Business Legal, KPMG Law Rechtsanwaltsgesellschaft mbH*
Anne-Kathrin Gillig, Partner, KPMG Law Rechtsanwaltsgesellschaft mbH*

For medium-term measures, we recommend that industrial companies

identify sanctions risks related to the business model;
Introduce a process for compliance with economic sanctions and, in particular, identify and risk-assess business partners (before and during the business relationship);
Define contact persons and responsibilities;
Set up processes to comply with country and commodity embargoes (before executing a transaction);
Define a process for the sanctions list check and select suitable tools to do this;
Create documents for the roll-out of the sanctions screening in the national companies; and
Prepare and deliver training for roll-out in the national companies.
In the medium term, financial services companies should
Carry out case-by-case checks and releases of existing transactions, for example in documentary business;
Introduce stricter filter settings or parameters in transaction monitoring;
Introduce a manual temporary process for non-SWIFT payments;
Set up processes to comply with country and commodity embargoes (before executing a transaction);
Implement stricter controls to identify circumvention transactions; and
Introduce further de-risking measures to reduce exposure to Russia.

Your contacts:

Barbara Scheben, Partner, Head of Forensic, Head of Data Protection
Alexander Geschonneck, Partner, Forensic, Member KPMG Global Forensic Steering Group
Timo Purkott, Partner, Financial Services
Anne-Kathrin Gillig, Partner, KPMG Law Rechtsanwaltsgesellschaft mbH*

An overview of sanctions can be found here.

Medium-term issues

What precautions should be taken to prepare for any further tightening of sanctions?
Given current sanctions and how they may evolve, how should a company's own branches or subsidiaries in Russia and Belarus be dealt with?
How should contracts with (new) customers in Russia and Belarus be structured in order to obtain the most extensive protection possible?
How should customs processing be checked or adjusted according to legal requirements?

Medium-term recommendations for action

Monitor further legal developments in connection with Russia and Belarus
Review contracts and, if necessary, make adjustments with regard to special sanction clauses
Set up or adapt export control compliance systems

Your contacts:

*The legal services are provided by KPMG Law Rechtsanwaltsgesellschaft mbH.

Here are the short-term recommendations for action.