Multinational Tax Risk Analyzer

Multinational Tax Risk Indicator

Purpose: This tool helps identify potential international tax risk areas based on your answers to general questions. It is a high-level indicator and *not* a substitute for detailed analysis or professional tax advice. International tax rules are complex and vary significantly by country.

1. Permanent Establishment (PE) Risk ? Risk of creating a taxable presence in a foreign country due to physical presence or activities, potentially subjecting profits to local corporate tax.

1.1 Do you have a fixed place of business (e.g., office, factory, warehouse, branch) in any foreign country?

Yes No Unsure

1.2 Do employees or dependent agents habitually conclude contracts on your company's behalf in a foreign country? ? Individuals regularly signing binding agreements for your core business activities in another country can create a PE.

Yes No Unsure

1.3 Do you have employees performing core business activities (e.g., sales, key services, management) while residing and working remotely from a foreign country for extended periods (e.g., >6 months)?

Yes No Unsure

1.4 Does your company maintain inventory/stock in a foreign country (e.g., in a warehouse or fulfillment center not just for short-term storage/delivery)?

Yes No Unsure

2. Transfer Pricing (TP) Risk ? Risk related to the pricing of transactions (goods, services, loans, IP) between related companies in different countries. Prices should be "arm's length" (as if between unrelated parties).

2.1 Does your company engage in cross-border transactions (e.g., sales, services, loans, royalties, management fees) with related entities/group companies?

Yes No Unsure

2.2 Are these intercompany transactions NOT consistently documented with supporting analysis showing they are priced at arm's length? ? Lack of proper documentation (e.g., TP studies, local/master files) significantly increases audit risk and potential penalties.

Yes (Not documented) No (Documented) Unsure

2.3 Have there been significant or unexplained shifts in profit/loss between related entities in different tax jurisdictions?

Yes No Unsure

2.4 Are intercompany agreements unclear, outdated, or not consistently followed in practice?

Yes No Unsure

3. Economic Substance & BEPS Risk ? Risks related to structures lacking genuine economic activity (substance) or using strategies targeted by the OECD's Base Erosion and Profit Shifting (BEPS) project.

3.1 Do any foreign entities earning significant income lack sufficient local employees, physical assets, or decision-making functions relevant to that income?

Yes No Unsure

3.2 Were key international structures or transactions primarily motivated by tax reduction rather than commercial objectives?

Yes No Unsure

3.3 Does the group utilize hybrid mismatch arrangements (exploiting differences in tax treatment between countries) or generate significant interest deductions in high-tax countries related to intercompany debt?

Yes No Unsure

4. CFC & Withholding Tax (WHT) Risk ? CFC: Risk of home country taxing undistributed income of foreign subsidiaries (esp. passive income). WHT: Risk of incorrect tax deductions on cross-border payments.

4.1 Does your company have subsidiaries in jurisdictions generally considered low-tax?

Yes No Unsure

4.2 Do any Controlled Foreign Corporations (CFCs) earn primarily passive income (e.g., interest, dividends, some royalties) or income from related-party sales/services outside their country of incorporation?

Yes No Unsure

4.3 Does your company make cross-border payments of dividends, interest, royalties, or service fees where withholding tax might apply?

Yes No Unsure

4.4 Are you unsure about the correct withholding tax rates (considering tax treaties) or lack documentation to support reduced treaty rates on these payments?

Yes (Unsure/Lack Docs) No (Confident/Have Docs) Partially

5. Digital Tax & Pillar Two Risk ? Risks related to Digital Services Taxes (DSTs) imposed by various countries, and the OECD's Pillar Two global minimum tax rules (15% effective tax rate for groups >€750M revenue).

5.1 Does your company provide digital services (e.g., online advertising, data sales, digital platform/marketplace services) to customers in multiple foreign countries?

Yes No Unsure

5.2 Are you operating in countries known to have enacted or proposed Digital Services Taxes (DSTs) (e.g., UK, France, Italy, Spain, India, Canada, etc.)?

Yes No Unsure

5.3 Does your consolidated multinational group have annual global revenues exceeding €750 million (or equivalent)?

Yes No Unsure/Close

5.4 If yes to 5.3, are you unprepared for calculating the Pillar Two GloBE effective tax rate (ETR) and potential top-up tax liabilities in each jurisdiction?

Yes (Unprepared) No (Prepared) Partially Prepared

Potential Risk Area Summary

PE Risk N/A

Transfer Pricing Risk N/A

Substance/BEPS Risk N/A

CFC / WHT Risk N/A

Digital / Pillar Two Risk N/A

Key Potential Risk Factors Identified:

Important Reminder: This tool provides a simplified, high-level indication of potential international tax risk areas based on your inputs. It is NOT exhaustive and does NOT constitute tax advice. Real-world risk assessment requires detailed analysis of specific facts, circumstances, and applicable laws/treaties. Always consult with qualified international tax professionals.