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Tax Accounting and Tax Reporting

The preparation of international financial statements often leads to differences between balance sheet values under international financial reporting standards and those used for tax purposes. These differences not only present accounting challenges for companies but also require efficient processes and close collaboration between various departments.

Tax accounting and tax reporting play a central role in capturing, analyzing, and reporting tax-relevant financial information. They serve as key interfaces connecting (group) accounting and (group) tax departments. This interdisciplinary nature significantly increases complexity, as data and information from multiple sources must be consolidated, analyzed, and accurately processed.

At the same time, there is increasing pressure to ensure error-free and efficient processes in order to maintain compliance with international financial reporting standards (e.g. IFRS, US GAAP).

In addition, topics such as the preparation of tax returns for Pillar 2 purposes, the integration of modern technologies (e.g. data analytics), the use of SAP solutions, and the outsourcing of activities (business partnering/managed services) are gaining growing importance.

Processes and Digitalization: The Key to Interface Optimization

Digitization offers enormous potential for making the interfaces between accounting and tax departments more efficient. By using modern technologies, companies can not only improve collaboration between departments, but also increase the quality and speed of their tax processes.

In a nutshell

That's what tax accounting, tax reporting, and deferred taxes are all about.

Tax Accounting: Definition

Tax accounting involves the application of tax regulations and laws to a company’s financial statements in order to calculate and optimize its tax burden. With effective tax accounting, you can ensure that your financial statements comply with tax requirements while also taking advantage of opportunities for tax optimization. This not only provides assurance of compliance with legal obligations but also supports strategic tax planning.

Tax accounting is also a process that relies heavily on close collaboration between the accounting and tax departments. The interfaces between these departments are crucial for accurately capturing and analyzing tax-relevant financial information.

Tax Reporting: Definition

Tax reporting goes beyond the recording of tax data. It encompasses the reporting in the annual financial statements, including the recognition of tax provisions, the disclosure of current and deferred taxes, and the treatment of tax uncertainties.

It is another interface topic that requires close coordination between the accounting and tax departments. Accurate reporting in the annual financial statements – including the recognition of tax provisions, deferred taxes, and tax uncertainties – is only possible when the underlying processes operate smoothly.

Deferred Taxes: Simply explained

Put simply, deferred taxes are tax assets or liabilities that arise from temporary differences between the tax and financial reporting valuations of assets and liabilities. The objective is to recognize and disclose future tax obligations or benefits in the financial statements. A distinction is made between:

Deferred tax assets: Represent future tax savings (resulting in a reduction of tax expense in the period).
Deferred tax liabilities: Represent future tax obligations (resulting in an increase of tax expense in the period).

Determining deferred tax assets and liabilities

Example of a deferred tax liability on the asset side: Internally generated intangible assets — these are capitalized under IFRS, while their tax base is lower.

Example of a deferred tax liability on the liability side: Under local tax law, provisions for maintenance expenses with a duration of less than three months must be recognized, whereas IFRS prohibits the recognition of such expense provisions.

Example of a deferred tax asset on the asset side: Depreciation under IFRS is higher than under tax law due to the pattern of economic benefits.

Example of a deferred tax asset on the liability side: Pension provisions in accordance with IAS 19 may be higher than the provisions recognized under local tax law.

Key Regulations regarding the recognition, measurement, and presentation of Deferred Taxes

IAS 12 – Income Taxes
SIC 25 – Income Taxes – Changes in the Tax Status of an Entity or its Shareholders
IAS 34 (Tax) – Interim Financial Reporting
IFRIC 23 – Uncertainty over Income Tax Treatments
IAS 1 / IFRS 18 – Presentation of Financial Statements and Disclosures
DRSC Interpretation 4 (IFRS) – Accounting for Income Tax Consequences of Employee Benefits under IFRS

Overview of current global corporate income tax rates (CIT rates)

Our website offers comprehensive and constantly updated information. This allows you to keep track of the tax framework and planned tax rate changes in various countries and make informed decisions.

More information

Project milestones in the implementation of tax reporting solutions

Fit Gap: Analysis & Planning

Assessment of current processes

Conceptualization: Development of a tailored solution

Definition of requirements and solution design

Implementation of the solution

Software selection & integration, data migration, and system configuration

Testing and quality assurance

System testing and quality assurance

Training

Employee training

Ongoing support and optimization

Support, maintenance, and continuous improvements

Integration into downstream processes

Corporate income tax declaration including Pillar 2 compliance

Our expertise

We offer you the most extensive expertise and experience in tax accounting and tax reporting in Germany. We provide you with comprehensive professional and process-related advice, backed by deep know-how.

Challenges: efficient tax processes and digitalization

Companies face complex challenges in tax accounting and tax reporting — from tight deadlines and organizational complexity to increasing technical requirements. The implementation and optimization of tax accounting and tax reporting processes, especially in connection with global minimum taxation (Pillar 2), are crucial for compliance with international financial reporting standards and for the accurate presentation of a company’s tax position.

With many years of experience, digital expertise, and tailored solutions, we support you in:

Process Optimization & Automation: Efficient design and automation of your tax processes using modern technologies such as SAP, Alteryx, and data analytics.
Data Management & Reporting: Structured data preparation, country-specific tax calculations, and transparent reporting.
Dashboards & Analyses: Customized dashboards and reports for clear analyses and well-informed decision-making.
Business Partnering & Managed Services: Taking over central tasks (e.g., global tax accounting/tax reporting, support in calculating income taxes — current, deferred, and Pillar 2) to ensure seamless processes.
Training & Monitoring: Practical training on international standards, implementation of monitoring and workflow systems.

This enables you to benefit from increased efficiency, reduced errors, adaptability to new regulations, and consistent, transparent reporting — all contributing to sustainable business success.

Our tax accounting and tax reporting services

Companies face numerous complex challenges in the areas of tax accounting and tax reporting. Our comprehensive range of services addresses these challenges directly, ensuring sustainable efficiency, quality, and adaptability:

Implementation of Tax IT Solutions

Design and implementation of IT solutions within tax departments for all types of taxes, with a focus on tax reporting, Pillar 2, and other tax reporting requirements such as Country-by-Country Reporting (CbCR).
Global rollout of tax reporting tools, end-user training, and ongoing support during initial implementation.
Continuous support of tax reporting software, including extensive tax and technical services, as well as ongoing process optimization.

Data Management and Reporting

Identification and preparation of all tax-relevant data from ERP systems such as SAP, Tagetik, IDL, and Lucanet.
Mapping of company- and country-specific requirements for tax calculations.
Development of efficient data processing workflows to ensure data quality.

Customized Reports and Dashboards

Creation of tailor-made dashboards and reports for transparent tax data presentation.
Use of modern data analytics tools for analyzing large data volumes and supporting decision-making.
(Partial) automation of reports to reduce manual work and sources of error.

Business Partnering and Managed Services

Taking over central tasks such as tax reporting in monthly and annual financial statements, Pillar Two declarations, and support with Country-by-Country Reporting (CbCR).
Managed services for Pillar 2: data preparation, calculation, and reporting in accordance with OECD requirements.
Assistance during capacity bottlenecks and ensuring smooth operational processes.

Process Digitalization and Automation

Implementation of modern technologies such as Robotic Process Automation (RPA) and Artificial Intelligence (AI).
Standardization and automation of interfaces between accounting, group accounting, and tax departments.
Introduction of workflow management systems for transparent task allocation and monitoring.

Training and Knowledge Transfer

Interactive training on IAS 12 and international accounting standards, both in-house and web-based.
Ongoing knowledge sharing on current tax requirements and best practices.
Promotion of know-how transfer between teams and locations.

Added Value through Our Support

Error Reduction and Quality Improvement

Automated processes minimize sources of error and increase the reliability of reporting.
Continuous training and monitoring ensure sustainable quality.

Efficiency and Time Savings

Automation and digitalization accelerate processes and relieve employees.
(Partial) automation of reports enables faster and better-informed decision-making.

Adaptability and Transparency

Processes and systems are flexible to adapt to new regulations and corporate structures.
Consistent, transparent reporting creates clarity for internal and external stakeholders.

Best-Practice Approaches

Access to proven methods and international expert knowledge through our network.
Support in implementing standards and efficient processes.

With our holistic approach to tax accounting and tax reporting, we help companies overcome challenges, optimize processes, and ensure sustainable quality and efficiency. Automation, digitalization, targeted training, and best-practice expertise provide a future-proof and transparent tax function.

Why WTS?

Tax-focused with a strong technology orientation

Leading in AI technologies

FISG-compliant and independent

Strong implementation capability and speed

Presence in more than 100 countries

Contact

Pia Puth

Pia Puth has many years of experience in tax accounting, tax reporting, end-to-end income tax processes, and advising on new technologies such as data analytics and artificial intelligence in the field of income tax. She is a partner in the Digital division.

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Additional digital tax services you may be interested in

End-to-end income tax processes

Overview CIT rates

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