When Should You Use The Services Of a Tax Advisor?
In many cases, the topic of tax consulting is not understood correctly . Most people think that every accountant also provides tax advice as part of their services. It’s not quite like that. To provide tax advisor services, someone must be authorized to provide tax advisory and be a member of the Chamber of Tax Advisers.
That is how far it can give tax consulting services following the law. When is it appropriate to use the services of a tax advisor, what is the tax advisor responsible for, and what benefits will it bring to me as a client?
An accountant is not automatically a tax advisor
According to legislation, practically anyone can perform accounting. All he needs is a freelance business – bookkeeping. On the contrary, tax advice can only be provided by a person who is authorized to provide tax advice. For a natural person to obtain a tax consultancy certificate, he must meet several requirements. They belong here:
- legal capacity,
- second-level university education at a university in the Republic or a recognized document of a second-level university education issued by a foreign university and at least five years of economic or legal practice or at least three years of work as an assistant tax advisor,
- conducting a professional exam.
The right to provide tax advice arises for a natural person on the day of entry or registration on the list. As of this date, the chamber will issue a certificate to the tax advisor for the performance of the tax advisory.
From the above requirements, it is clear that not everyone will get into the circle of tax advisors. Five years of experience in economics or three years of experience as a tax advisor assistant must be completed by passing a demanding professional exam. And not everyone will take such a test.
This means that if someone already has a license as a tax consultant, he is an expert in his field and can be relied on.
This is one of the main reasons why it is advisable to use the services of a tax advisor. Especially in matters where a more considerable amount of money is involved, it is good to have an official opinion from a tax advisor that the planned procedure follows the law and there are no risks.
What is tax advice?
Although the answer to this question may seem obvious, most people probably do not know what the term entails. Tax consulting is a business, the subject of which is the provision of consulting services in matters of taxes, levies, and fees.
A tax advisor is obliged to protect his client’s rights and legitimate interests, act honestly and conscientiously, consistently use all legal means, and apply everything he believes to be applied according to his conviction and the client’s order.
The law defines tax advice as:
- Advice on determining the tax base and tax and tax planning,
- Providing opinions and explanations for clients on applying legal regulations in the field of taxes.
If one of these activities is performed by a regular accountant without the authorization of a tax advisor, he is performing tax consulting without permission. In addition to putting himself at risk, he also puts the client at risk.
Since such an accountant is not authorized to provide tax advice, he cannot be held responsible for any damages. The Act on Tax Advisors and the Chamber of Tax Advisors contains a provision on the assumption of responsibility. The tax advisor is liable to the client for the damage caused to him in connection with the provision of tax advice.
A medium-sized manufacturing company handles accounting and taxes internally. As part of the company’s expansion, it is about acquiring a stake in another company. Such a transaction involves several tax and accounting risks.
Since this is a significant amount, it is correct in this case to contact an authorized tax advisor with a request for an official opinion. Based on the input data, the tax advisor should prepare the entire transaction so that the buyer does not face any tax risk and, if necessary, comment on the advantages/disadvantages of the whole marketing.
Cooperation with a tax advisor
As we mentioned above, tax consultancy services mainly include the preparation of expert opinions and advice on tax calculations. Therefore, companies usually turn to a tax advisor if they are preparing non-standard transactions with no experience or calculating corporate income tax at the end of the year. The work of a tax advisor can be beneficial for the latter option.
Many companies keep their accounting in-house. Consultation with an independent tax advisor can be invaluable when closing account and filing tax returns at the end of the year. The tax advisory will process the entire income tax calculation based on accounting documents and discussions with the client. It can identify possible risks and draw attention to them. For a few hundred euros, it may not be a bad investment at all.