Indirect taxes

VAT incentives and benefits

• In some countries, governments create incentives through reduced tax rates or even tax exemptions for environmentally friendly products and services. Transparency regarding the scope of incentive systems and the requirements is essential.
• Promotion of green technologies: Certain products and services are further incentivised through measures such as a zero VAT rate.

Supply Chain Management - Sustainable supply chains

• Companies that prioritise ESG can favour suppliers who adopt sustainable practices, which may influence the VAT assessment of the supply chain. These changes may, in turn, require a review or adjustment of the tax assessment.

Product design and pricing strategies – sustainable product development

• In the context of the circular economy, materials previously considered waste may now qualify as raw materials, potentially requiring adjustments to VAT assessments.
• Pricing strategies: The pricing of sustainable products and services can also be influenced by reductions. Companies should incorporate these reductions into their pricing strategies to remain competitive.
• Products are not always offered at the same market price. For example, if products are offered at reduced prices in certain countries, the appropriate VAT assessment base and the eligibility for input tax deduction must be examined.

New business models

• Sustainable market operations often give rise to new business models and offerings, necessitating a thorough review of underlying supply and service relationships.
• Measures to offset a company’s emissions footprint frequently involve complex service relationships, which must be carefully understood and assessed.

Employee retention and sustainability measures

• As part of a sustainability strategy, companies often implement measures that benefit employees or affect the services provided to them. Alongside wage tax considerations, it's essential to accurately determine the corresponding VAT implications.

Regulatory changes - new indirect taxes and levies

• Governments may amend or introduce new laws to promote ESG goals. Companies must closely monitor these changes to determine which regulations or reporting obligations impact their business model. This includes understanding new regulations and integrating them into existing processes.
• Future taxation trends: It is likely that future tax policies will focus more on ESG goals. Therefore, companies should adopt a long-term perspective and incorporate the potential impacts of changes in indirect taxes that promote sustainable behaviour into their tax strategies.

Internal processes and IT systems - Optimising IT systems

• To address the increasing demands for compliance and the integration of ESG factors, companies should optimise their IT systems. This includes implementing software solutions capable of integrating and automatically processing ESG data and relevant information.
• Companies must also ensure that the necessary data for reporting is readily available, with guaranteed access and the ability to analyse it effectively.