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Deloitte tax policy

Introduction

The public debate around tax has been shifting rapidly over a number of years. In this context, stakeholders, both internal and external, expect Deloitte Netherlands to reflect on how we deal with our own tax affairs including topics like, being in control of tax risks, sustainable tax and contributing our fair share.

In this section, we describe our attitude as a taxpayer, regarding both Deloitte and our Equity Partners (‘EP’), our relationship with the Dutch Tax Authorities (‘DTA’) and our responsibilities as a member of the global Deloitte community. This section aims to reflect on our transparency about our tax position and to address our leading role on this topic within society.

For the avoidance of doubt, this document does not refer to Deloitte’s position as a financial and tax advisor during its business operations.

Deloitte policy

Deloitte’s tax policy is based on three pillars.

  1. Deloitte is a purpose-driven organisation acting within a global network. In this network, our Global Principles guide the way we do business, enabling us to take a leading role in society and protecting our brand and reputation. As part of these principles, every Deloitte member firm needs to obey international and local tax rules. This applies to the organisation itself and to its EPs. Among other requirements, all tax reporting in the name of Deloitte and of the corporate entities held by the Equity Partners must be done in a timely manner and in compliance with all relevant local tax rules. Furthermore, Deloitte and its EPs will not enter into aggressive tax planning positions or in structures which could be defined as artificial.
    Deloitte Global requires Deloitte to confirm annually that it meets these principles.

  2. Deloitte aims to act as a responsible party in Dutch society, not only meeting the requirements according to local rules, but also showing leadership towards its stakeholders. We contribute our fair share of corporate income tax in the countries we conduct our business. We commit ourselves to withhold and pay wage tax in the countries where our employees perform their activities in accordance to the applicable rules. All our tax-related reporting is part of an integrated internal control framework that includes a range of checks and balances to minimise the risks where possible.

  3. Deloitte has entered into an agreement with DTA, which is called Individual Control Plan (‘Individueel Toezicht Plan’, or ‘ITP’). This ITP consists of three elements:

    1. We regularly discuss our tax control framework, as part of our overall Internal Control Framework for
      Financial Reporting (ICFR), with DTA. Suggested improvements are implemented after approval;

    2. Annually, we perform a randomly selected sample test in our system on all our outgoing payments to test the compliance of the relevant tax aspects. DTA is involved throughout this process and receives an integral report on findings and identified improvements. Is the findings lead to supplementary tax assessments, we will act accordingly;

    3. In our quarterly meetings with the DTA, we discuss all our pending and new tax affairs and our filings in a fully transparent manner.

Governance

Deloitte is organised as a corporate entity. The Executive Board consists of three persons, of which one has the function of Chief Operating Officer (COO). The COO is responsible for all finance matters including tax matters. The Chief Tax Officer  (CTxO) discusses the tax related issues on a regular basis with the CFO and COO.

The CTxO leads a group of experts dedicated to corporate tax, wage tax and indirect tax matters. These specialists regularly discuss pending issues, the impact of new regulations and new developments within the organisation, and they take appropriate actions if needed. The CTxO is also part of an internal tax committee, which consists of Deloitte professionals from a broad range of departments within the internal organisation (such as HR, Talent, Finance, back office) to discuss all upcoming tax related developments and issues in an early stage. All developments, and finding are discussed in full transparency with DTA in the context of the ITP.

Furthermore, Deloitte’s CTxO is part of a group of CTxO’s within Deloitte Global as well as within NSE. On a regular basis, these groups discuss anticipated trends and developments in the tax environment and possible measures or adjustments in Deloitte organisation’s tax policy.

Tax position

Corporate tax

Deloitte’s EPs charge Deloitte a management fee through their respective personal management companies. These management fees are fully taxable at the level of the individual management company, after deducting a so-called customary salary. The level of this salary, which is taxed with Personal Income Tax at the level of the EP, is discussed and agreed upon with DTA on a yearly basis. Deloitte’s remaining profit is taxable at corporate level. Both Deloitte and the personal management companies of the EPs are taxed in accordance with Dutch rules and regulations and against the regular Dutch corporate income tax rates.

All filings for corporate income tax returns of Deloitte and the individual management companies of the EPs are prepared centrally by Deloitte, not only in line with legal requirements, but also in line with the guidelines agreed with DTA.

Cross-border projects or other international services are fine-tuned with CTxOs of the other Deloitte Member Firms to ensure Deloitte meets local rules and regulations.

Wage tax

All relevant filings are carried out in a timely manner and in accordance with local rules and regulations. Meetings are held regularly with specialists from the DTA to discuss pending and new tax issues, such as charging travel expenses, cost reimbursements and the so-called ‘vrije ruimte’ (free space) in the wage tax.

All cross-border work situations (including secondments, projects and expats) are handled by a dedicated group of specialists in The Netherlands as well as abroad to ensure that Deloitte and its employees meet all Dutch and local requirements.

Findings from the annual self-initiated sample test as described above are reported in full transparency. In case these findings lead to additional taxation we file supplementary tax filings.  We also indicate potential improvements or adjustments in policies and procedures to be made in order to prevent issues recurring in the future.

Value added tax

On all incoming and outgoing transactions, we follow the rules and guidelines for value added tax (VAT). Specific transactions, such as invoices issued to EU and non-EU clients or invoices for VAT exempt services, are subject to strict protocols to ascertain that VAT is reported correctly. VAT is also subject to the self-initiated sample test as mentioned earlier, and findings are reported to DTA in full transparency.

Relationship with stakeholders

We address this subject in three parts: (i) our shareholders, (ii) the Deloitte Organisation and (iii) our business partners, clients and society.

  1. For Deloitte’s direct shareholders (the EPs), we have implemented a system of internal controls to ascertain that all EPs and their respective personal management and holding companies are aligned to the same principles. All matters related to tax compliance for these entities are serviced by a dedicated group of specialists (Partner Administration Services, or ‘PAS’) to ensure all tax positions are aligned to our Global Principles. The CTxO is involved throughout the process. Furthermore, all EPs are required to provide PAS their personal income tax returns annually. These returns are monitored by PAS to ascertain that no tax positions are used that might conflict with our tax compliance principles.

  2. Regarding Deloitte as an organisation, tax is a theme that is also discussed within the Audit & Finance Committee of the Supervisory Board. This is a safeguard to ascertain that no positions are taken that might result in tax charges afterwards or that might trigger reputational consequences.

  3. Deloitte acts as a responsible party in the business community, taking the lead in debates and actively accompanying clients as they navigate business decisions and sustainability questions. In that context, Deloitte recognises that a proper tax policy is essential for being regarded as a professional organisation within our business community.

With attitudes towards tax in our societies rapidly evolving, large corporates in particular are subject to scrutiny. Consequently, we understand that, as Deloitte is one of the leading voices in these public debates, we need to establish and abide by clear policies and controls within our own organisation.

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