Most people only turn to a tax advisor when a problem has already arisen: they are facing a tax audit, have received a penalty, or are unexpectedly confronted with a tax liability. While tax advisory services can certainly help in these situations, they are far more valuable when used proactively for prevention and informed decision-making.
When and Why Should You Involve a Tax Advisor in a Business Decision?
What Are the Roles of an Accountant and a Tax Advisor?
The primary role of accounting is the retrospective recording of business transactions in accordance with legal requirements, whereas tax advisory services focus on planning future tax liabilities and outcomes.
These two functions do not replace each other; they complement one another. Simply put, the accountant records what has happened and determines how transactions should be accounted for and how much tax must be paid. A tax advisor, on the other hand, provides guidance on what should happen, helping businesses understand the tax implications of different decisions before they are made.
Tax Advisory Services Are Particularly Valuable When:
- You want to manage tax risks consciously and proactively.
- You are preparing for strategic business decisions.
- You need assistance interpreting tax legislation.
Tax laws are complex and frequently changing. A tax advisor can help identify the tax risks associated with business decisions, uncover existing structural weaknesses or incorrect practices within a company, and reduce the potential negative consequences of tax audits.
Many business decisions carry significant tax implications, including corporate restructurings, reorganizations, the launch of new business activities, or international expansion. If tax considerations are ignored during the decision-making process and the accountant is only asked afterward how much tax must be paid, businesses may face unpleasant surprises that can no longer be avoided. Had these consequences been considered beforehand, the company might have chosen a different course of action.
Furthermore, tax issues often do not have a single clear-cut answer. In such situations, a tax advisor’s role is to develop a well-reasoned, defensible, and properly documented position.
LeitnerLeitner is one of Central Europe’s leading advisory firms. Thanks to our integrated approach, clients receive coordinated solutions for all tax, financial, accounting, payroll, legal, and audit-related matters. Our professionals always view individual assignments within the broader business context. While our accountants are happy to assist with simpler tax questions, more complex issues requiring specialized expertise are handled by dedicated tax specialists.
Situations That Call for a Tax Advisor
Corporate Groups and Related-Party Transactions
- Transfer pricing matters
- Intra-group services
- Management fees
- Financing structures
International Taxation
- Foreign ownership structures
- Cross-border transactions
- Double taxation issues
- Permanent establishment considerations
VAT-Specific Issues
- Determining the place of supply
- Assessing whether reverse-charge VAT applies
- Identifying situations where VAT deduction may be limited or restricted
Restructurings and Transactions
- Demergers, mergers, and acquisitions
- Sale of shares or business interests
- Transfer of assets or business divisions
Tax Audits and Disputes with the Tax Authority
- At the start of a tax audit
- During the review and response to audit reports
- In disputes with the tax authority
Unusual or Innovative Transactions
Transactions with uncommon structures or novel business models often require careful tax analysis to ensure compliance and minimize risk.
In short, a tax advisor does much more than simply reduce tax burdens or identify available tax incentives. Their real value lies in ensuring that tax obligations do not come as an unexpected surprise to the business and that the company’s position and decisions remain defensible if challenged by the authorities. Most importantly, businesses should consult a tax advisor before making key decisions, during the planning stage, rather than only after problems have emerged.
Why Is It Worth Hiring a Tax Advisor – and In Which Areas Do They Provide Real Added Value?
Where Do Digitalization and Automation Stand Today in Accounting and Payroll?
The Relationship Between Accounting, Payroll, and Tax Returns
