JUVE Law Firm of the year

Tax

Internal investigations driving work at large firms

The importance of tax as a central element of good corporate governance has been rising steadily for some years now. There have been two issues dominating advice of late: internal investigations and the so-called BEPS Project (base erosion and profit shifting).

Litigation as part of dealing with the fallout from borderline tax situations has become the main revenue driver for some firms. Cases such as the German Soccer Association affair over the awarding of the 2006 World Cup, the ADAC structures, Maple Bank’s history of dividend stripping and investigations into Deutsche Bank’s involvement in sales tax fraud are just the tip of the iceberg – the majority of investigations most likely never make it into the public domain.

Cross-border tax abuse work still rare

In contrast, the challenges posed by the measures now passed in Germany and the EU to tackle cross-border tax abuse by corporates (BEPS) are still just theoretical – major projects leading to huge fees are still a rarity. This is likely to change, esp. as regards tax reporting in companies. Disputes are likely to arise between individual countries over the correct amount of taxation for international corporates. The consequence: skill in conducting international arbitration – a field that has hardly been relevant at all in tax – will become a key discipline in the future.

Expansion and restructuring everywhere

Top-flight international firms such as Freshfields Bruckhaus Deringer and Linklaters, who also dominate the internal investigations scene, are well prepared for this. Market leader Flick Gocke Schaumburg also seems to have set the right course just in time by joining the international Taxand network. Integrating itself into the network, however, is calling for management efforts on a scale FGS has never seen before.

For other firms, it is the generation change taking center stage, as these teams have to accomplish this for the first time since establishing a tax presence in Germany. Allen & Overy, for instance, recruited staff from Big Four competitors in 2015 and 2016 to cushion the withdrawal of Eugen Bogenschütz from the partnership. Baker & McKenzie is following the same pattern: to fill the gap left by Christian Brodersen’s departure, the firm brought on board a young partner from KPMG. Both firms are thus displaying yet again their traditional openness towards tax advisors from the Big Four world – though the success of this experiment has yet to be seen.

Just below the Big Four in terms of turnover is the large MDP Rödl & Partner, which focuses on the internationally active German Mittelstand. For some time now, Rödl has been transcending its traditional boundaries. By taking on sales tax advice to a number of DAX corporates, the firm closed in on the Big Four – though, in terms of renown, Rödl can rival neither these nor the expanding specialist firm Küffner Maunz Langer Zugmaier.

 


 

Tax advice is usually provided on the interface with other legal areas. For specialist expertise, readers are therefore advised to consult the following chapters: ?banking and finance, ?corporate, ?M&A, ?company succession and trusts, ?private equity and venture capital and ?real estate. Firms with a specialty in ?tax criminal law are listed in the corresponding chapter. An overview of firms providing advice related to current (internal) investigations within interdisciplinary teams or advising companies on compliance structuring can be found under ?compliance audits and investigations.


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