European tax survey 2015: Transparency, simplification and collaboration

The 2015 Deloitte European Tax Survey was conducted in Autumn 2015, and closed just before the release of the OECD/G20's final Base Erosion & Profit Shifting (BEPS) package (OECD website). International tax reform is gathering pace, leaving tax professionals under increasing pressure to understand and comply with additional new requirements, including the need to report more information on their activities and tax profile by country.

In order to help evaluate the impact of these developments and other trends, and the potential effect on the tax department of today, as viewed by tax professionals across Europe, Deloitte has undertaken its third annual European Tax Survey, which received more than 800 responses.

The 2015 European Tax Survey revealed:

Impact of a changing landscape

• The biggest concern for the second year running was changes in tax legislation
• Slightly more respondents said that BEPS was important to their tax department than the year before (53.1%, up from 52.4% last year). There was also evidence that the BEPS agenda is starting to get traction beyond the tax department.
• More than a third of respondents intended to review or amend their international tax strategy in response to the OECD/G20 BEPS Action Plan, and more than a half anticipated that their tax compliance costs would increase as a direct result of BEPS.
• 43.5% had started planning for the likely impact of BEPS. The majority of those who had started preparing for BEPS were readying their organisations for the BEPS Action 13 transfer pricing documentation changes (84.8%).
• Respondents were beginning to develop additional disclosure around tax in their organisation’s financial statements, particularly if they feel their organisation is, or may become, subject to scrutiny from external stakeholders.
• Respondents were ambivalent about a potential mandatory Common Corporate Tax Base across the EU - 61.1% had no opinion, while 19.1% and 19.8% thought it would be positive or negative respectively.

Key success factors for tax professionals

• The most important measures of success for tax professionals were compliance (filing tax returns on time and accurately) and certainty around tax liabilities.
• Most respondents (73.7%) thought that scrutiny around corporate tax strategy had increased over the last 5 years, but only 51.7% thought it had done so over the last year. 
• In response to increased scrutiny, 44.8% said they ensured buy-in to their formal group strategy from the board, and 43.4% said they developed additional disclosure around tax in financial statements.

Most favourable locations

• The Netherlands, Switzerland, Austria and UK were seen as the most favourable jurisdictions to operate in of the larger economnies, while Luxembourg and Ireland were seen as the most favourable of the smaller jursidictions. Germany, Italy and France were seen as the most challenging.
• Respondents valued good relationships with tax authorities and simpler tax systems most highly, with the most commonly selected reasons for tax uncertainty being 'frequent changes to legislation', and 'ambiguity, weaknesses and reversals in tax authority doctrine or publicly available information'.
• The main factor that could increase competitiveness of a location, as chosen by 43.3% of respondents, was simplification of the tax system, the same factor chosen for the last two years.
• Fewer respondents had been subject to a tax audit in the last three years - 65.1% compared with 70% in 2014.