Why use an outsourced tax department?

As a company grows, its tax issues become more numerous, more technical and more international.

Transfer prices, intra-group flows, restructurings, financings, acquisitions, establishment abroad or changes in ownership often require high-level tax expertise, available at the right time and able to intervene quickly.

In this context, externalised tax management is a particularly effective solution.

It allows the company to have immediate senior fiscal competence, without bearing the constraints, delays and rigidities of recruitment.

It can also strengthen an existing internal tax department on complex or highly specialized issues.

An immediate operational solution

Where an enterprise does not have an internal tax department, the use of an outsourced tax department enables this function to be immediately structured.

The company benefits without delay from an experienced interlocutor able to analyse its organisation, flows and main tax risks.

This speed is an important advantage over recruitment.

Recruiting a tax director usually involves several steps: job definition, candidate search, selection process, negotiation, possible notice and integration into the company.

During this period, however, fiscal problems continue to exist.

On the contrary, an outsourced tax department provides immediate and high-level operational competence.

Direct access to senior expertise

Outsourcing also makes it possible to focus the company's budget on the level of expertise actually needed.

For some groups, the tax need is important without justifying the daily presence of a full-time tax director.

The company can then directly access a senior professional with significant experience in corporate taxation and international taxation.

This organization is particularly relevant when there are few decisions to deal with but high issues.

An international implementation, restructuring or transfer pricing policy may require very technical expertise during certain periods, without generating a constant volume of work throughout the year.

Avoiding recruitment constraints

Recruitment of an internal tax director may be necessary when the tax workload becomes daily and permanent.

Nevertheless, there are several constraints.

It requires a long-term commitment, a high fixed cost and sometimes complex adaptation of the profile to the real needs of the company.

The externalised tax administration provides more flexibility.

The scope of the intervention can evolve with the group, depending on its development, operations and international issues.

The company thus has permanent competence without immediately creating an additional internal structure.

A solution particularly suited to international groups

International taxation often requires very specialized skills.

Transfer prices, tax treaties, withholding tax, intra-group financing, stable institutions or cross-border restructuring require a capacity to coordinate several rules and sometimes several jurisdictions.

The outsourced tax department can centralize this analysis.

It can act as an interlocutor with the DAF, the Directorate General and the various foreign councils in order to ensure the overall coherence of tax decisions.

This function is particularly useful for SMEs and ETIs which have a significant international activity but not necessarily an internal specialised tax team.

An interest also for large companies

The use of an outsourced tax department is not limited to companies without a tax function.

Large companies already having a tax director or an internal tax team may also have an interest in outsourcing certain issues.

This may be the case when they need:

• expertise in international taxation;

• accompaniment on transfer prices;

• independent analysis of a complex operation;

• temporary reinforcement upon acquisition or restructuring;

• coordination with several foreign councils;

• accompaniment on an unusual technical problem.

The outsourced tax department then becomes a extension of the internal tax function.

It brings an external look, complementary expertise and additional capacity when the organisation requires it.

Strengthening the existing Tax Directorate

An internal tax department cannot necessarily have all the expertise at its disposal.

Some issues are too specific or too specialized to justify the recruitment of a dedicated expert.

Outsourcing can then effectively complement existing skills.

The internal tax director retains the group's daily knowledge and coordination role.

The externalised tax specialist intervenes on topics requiring specific expertise.

This organisation allows to combine the proximity of the internal team with the experience of a specialised board.

A function that evolves with the company

Outsourced fiscal management can take place at different stages of development.

For a company without a tax department, it can be the main tax function.

For an ITE, it can accompany international growth and gradually structure tax governance.

For a large company, it can temporarily or sustainably strengthen an existing tax team on certain strategic topics.

This flexibility makes it possible to adapt the tax organisation to the real level of complexity of the company.

A logic of continuity and anticipation

The main value of an outsourced fiscal management also lies in the continuity of the relationship.

The firm is gradually familiar with the group's structure, past operations, flows, risks and projects.

It can intervene before decisions are taken.

This anticipation capacity is essential.

In tax matters, some options disappear when the transaction is already underway.

An outsourced tax department can therefore integrate taxation into the decision-making process rather than analyse it only after a transaction has been implemented.

Edouard Pruvost's intervention

Edouard Pruvost is a lawyer specializing in tax law and has over ten years of experience in corporate taxation and international taxation.

A PhD in tax law, he devoted his thesis to corporate taxation, which enabled him to develop a particularly technical and in-depth expertise in the tax issues related to the organisation, development and operations of companies.

He teaches business tax law at the University and at law schools.

A holder of the Certificate of Specialization in Tax Law issued by the Conseil national des barreaus, he was also appointed Chairman of the Jury of the Certificate of Specialization in Tax Law of the École de Formation du Barreau de Paris.

Setting up an outsourced tax department

For a company without a tax department, outsourcing is often the quickest way to gain immediate access to an experienced fiscal competence, without the constraints of recruitment.

For a company already with an internal tax function, it provides an opportunity to strengthen the existing organisation and to gain access to complementary expertise on the most complex issues, particularly in international matters.

To benefit from personalized support and study the establishment of an outsourced tax department adapted to the issues of your company or group, contact Edouard Pruvost.