Tax Risk Strategy of the Dürr Group

Taxes are important sources of government revenue and are central to the fiscal policy and stability of countries. Companies have an obligation to comply with tax legislation and are expected to implement pertinent tax practices. This tax strategy sets the framework on how Dürr Group Companies deal with taxes in jurisdictions where they have economic activities.

Dürr has introduced a Code of Conduct applicable for all personnel employed by any Group Company, which sets out the core corporate principles (Dürr’s code of conduct is available → here). Embedded in the corporate culture are mechanism for reporting concerns about unethical or unlawful behavior.

Our compliance management system (CMS) provides a framework for action to ensure that all business operations are carried out in accordance with the law and internal guidelines. The three elements - prevention, early detection and response - are core components of the CMS. A Group-wide compliance organisation directive defines responsibilities, communication channels and measures.

Dürr’s tax strategy is based on and is embedded in the compliance management system. The final responsibility for meeting tax obligations rests with the board of management. As the CFO has assumed this responsibility by virtue of assignment, the CFO shares this burden with the Vice President Corporate Tax.

Dürr’s board of management reviews this tax strategy on a yearly basis.

Each entrepreneurial decision at Dürr is based on a careful and prudent assessment of the relevant opportunities and risks. This includes all risks associated with taxes, legal and compliance. Our strategy is to control and reduce risks with the aid of an effective risk management system to ensure that the benefits clearly outweigh the risks involved.

Dürr’s corporate risk management system – development and objectives

Dürr’s corporate risk management system was introduced in its present form in 2008 and is continually adjusted to meet new requirements.

Dürr’s risk management system is tailored to the mechanical and plant engineering business. It is targeted at recording, analyzing and evaluating risks systematically in a uniform process. This enables us to adopt effective counter measures at an early stage. At Dürr, we document all specific risks of our business, including tax risks, to the extent that these are identifiable and specific to an adequate degree.

As a result, we have implemented a compliance program to combat aiding and abetting tax evasion based on the UK COO (Corporate Criminal Offence of Failure to Prevent Facilitation of Tax Evasion).

At Dürr, we strive to be fully compliant with tax rules in the jurisdictions in which the Group Companies operate. We aim to avoid the risks of interest and penalties, as well as the loss of reputation for the company, its bodies and its employees by taking suitable internal precautionary measures.
In order to assure complete tax compliance, we have implemented organizational instructions, which addresses the following issues:

• Name the person (s) in the organization responsible for tax matters
• Regular reviews
• Provide tax training on a regular basis
• Communication of tax related facts
• Solid documentation of facts
• Knowledgeable interpretation of tax law

Significant tax issues and projects are presented to the Board of Management for information or approval. In order to take the perspectives of the various stakeholders into account in the decision-making process, external expert opinions are obtained where deemed appropriate.

Incidents or suspected cases of tax fraud can be reported to the company internally or by third parties using the established communication channels of the compliance function.

Within the framework of IFRS, tax reporting in the annual report is audited as part of financial statements.

Dürr provides a country-by-country report to the relevant tax authorities on a regular basis.

Tax planning is the analysis of a financial situation or plan from a tax perspective. The purpose of tax planning is to ensure tax efficiency, with the elements of the financial plan working together in the most tax-efficient manner possible.

While applying the Code of Conduct to tax planning, each transaction must have a sound legal and commercial basis. This excludes the implementation of artificial tax scheme. Examples of such artificial tax schemes would be the absence of commercial purposes or the allocation of taxable income to locations, where no underlying activities are performed. Other examples could be the allocation of costs to locations receiving no benefits from these allocated costs and implementing financial transactions via Group Companies not having the financial means for these transactions.

Since 2020, the Dürr Group reports all transactions subject to DAC 6 (Directive on Administration Cooperation).

Tax authorities are representative of countries’ government and administration and should be dealt with in a professional, courteous and timely manner.

Local management and group tax function are seeking a good working relationship with the tax authorities. If there is a disputable application of tax law, then Dürr will seek proactive tax authorities understanding and interpretation in order to evaluate the risk associated within explanations of such tax law. Maintaining a good working relationship with the tax authorities will mitigate the risk of disputes if Dürr has inadvertently taken an incorrect tax position.