Today, more than ever, effective tax management is key in case you are dealing with situations such as:
- determining a bid price in an acquisition process;
- reallocation of existing bank debt and intercompany debt;
- reorganizing your current group structure;
- understanding the impact of taxes on your cash position;
- a complex supply chain with multiple countries and entities;
- valuation of deferred tax assets;
Effective tax management can result in decreasing the effective tax rate, maximising the use of available tax assets, optimising the existing leverage, improving the cash flow and reducing compliance costs.
Modelling your taxes helps you to better understand, anticipate and further optimise your direct and indirect tax charges and to obtain an improvement of your working capital based on your business plan.
Depending on your needs, such tax model can provide you a fair and better understanding of the tax impact of maintaining your current group/financing structure as opposed to implementing alternative scenarios, allowing you to decide on such restructuring/refinancing scenarios in a more informed manner.
…Hence, tax modelling is an indispensable aspect of financial management.
February 2nd, 2010 at 9:01 am
Given that all our operations are within the euro zone (and we’d like to keep them within this currency area), and that we have a manufacturing footprint primarily in northwestern Europe, what sort of corporate tax rate can we aspire to? For instance, are rates as low as Ireland’s within reach, even if we don’t have production facilities there?
Best regards,
Adam Smith
February 10th, 2010 at 9:47 am
Dear Mr. Smith
First of all we would like to thank you for your comment on our blog-post regarding tax modelling.
With respect to your questions it is not straightforward to provide you with a concrete answer, as this will depend on the specific financial and tax situation of the companies in your group.
However, in practice we notice that, in case of effective tax management and planning, and also depending on how far you want to go, a low average consolidated tax rate can be obtained.
In this respect, various structuring and financing scenarios’ could be envisaged depending on the specific situation of your group companies. The outcome of these ideas can be directly transposed by using tax modelling. As a result, you will get a clear overview on the tax paying position of the companies involved prior and after the implementation of the intended restructuring scenarios’.
In case you would like to further discuss your specific situation, we would be pleased to do so during a meeting.
Kind regards
Nancy De Beule, Director Tax services, +32 3 259 3125
Annelies Butaye, Manager Tax services, +32 3 259 3165