When I founded the Merlyn Tax Solutions Group in 2003, after many years of working in the tax area for the Dutch government, one of the Big Four organisations and as a European tax director in the computer industry, I did so because I wanted to integrate these three entirely different tax backgrounds and offer a new type of tax advisory services to industry. Having been active at these three entirely different sides of the tax table leads to a regular flow of new tax structures and tax approaches which are not to be found elsewhere.

I also felt that there was too much distance between company CEOs and tax advisers and that the message should be sent out to CEOs that leaving tax matters to the CFO, who usually leaves it to his tax director, who then contacts a friend in one of the Big Four accounting firms or the big international law firms, may not always be the right way to handle taxation. That, in fact, a case is to be made for more CEO involvement in the tax area, combined with more influential role of the type international tax boutique which I am running, based on 35 years of experience in the three tax areas mentioned. The largest tax savings I have been able to bring to companies in my 30 years plus of working in the tax area, have their roots in talks with CEOs, COOs, engineering VPs, marketing VPs etc and not in the often obligatory talks with CFOs or tax directors.

So the first question should be: what is wrong with the Big Four and/or the big international law firms when seeking tax advice? In essence, the answer to that question is that these firms, who certainly employ a lot of clever people, tend to advise clients similarly. Even if one firm has a head start with a new tax savings idea, employee migration will ensure that after only a few years, the other firms start selling the same structures. With the result of the financial drain on the budgets of many governments getting so large that the law gets changed. Those of you who have followed the developments in the (non-) deductibility of intra-group interest, where changes in the legal system occur in many countries, almost every year now, will no doubt agree. Many governments are planning to launch attacks to these structures, After all, they can go back five years in time.

When one obtains tax advice from an experienced adviser who does not employ hundreds of staff who are all seeking to sell aggressive tax advice, (most of them copied from other clients’ files) the risk of having do redo a large part of a group’s international tax planning every two or three years will be a lot less simply because if only a few companies use a certain tax savings technique, the government’s budget will not be endangered and the tax planning used will not be attacked by a change to the rules which invalidates all existing tax structures when announced.

The Merlyn Tax Solutions Group which I head offers yet another new feature which I believe CEOs should be aware of: we only start projects for clients on a success fee basis: we in fact give free tax advice until it is clear that (one of) our solutions may be just what a company is looking for. Until that time, CFOs and their tax directors are free to ask us questions, even second opinions on existing tax structures they use, for which we will not charge them. This may seem odd (‘there is nothing like a free lunch’) but it is true: we only need a hit ratio (new clients coming over to us after we give them a free second opinion) of 20 percent in informing prospects that certain tax structures they are using are either wrong, sloven, outdated or no longer ‘state of the art’ to recover the expenses in time we have to invest for this, whilst our actual hit ratio is well over 30 percent. So we do benefit substantially from giving free international tax advice.

Since we started the Merlyn Tax Solutions Group in mid-2003 we have been able to develop several new and ‘proprietary’ tax savings ideas, usable for many types of multinational enterprises. These solutions do not run the risk of becoming obsolete because the relevant government will not attempt to change the law if they find out what these structures cost them (based on my experience as an ex-tax inspector and Ministry of Finance executive), they have been designed to have a long lifespan (based on my experience as an industry tax director, who – contrary to the big advisory firms – hates annual changes to his systems employed), and can compete with any of the structures sold today by the big consultancy firms (of which I have been a part for more than 20 years, too).

‘’If you go with the crowd, you will go no further than the crowd’’ is the applicable expression here: working with the tax departments of the Big Four audit firms or the big international law firms, does not really add much to your company’s flexibility in the tax area. In fact, it may well block your company’s tax planning, long term, more than you have ever imagined.

Just to finalise this editorial with some practical examples: the latest wind in international tax planning is the use of hybrid partnerships (hybrid loans have even been around since 1986 or so). These tax structures involve a high degree of complexity and often legal entities are being used for this type of tax planning with even the large tax advisory firms have insufficient legal expertise. May I just mention ‘commissionaires’ and ‘cooperative associations’ as examples? But the Merlyn Tax Solutions Group recommends the use of hybrid branches, which are far easier to set up and maintain and do not attract attention from the tax authorities because they are so common, but can still lead to very substantial corporate income tax savings for a surprisingly large number of multinational enterprises. We also recommend using SEs rather than an NV here, an SA there, an SpA and an AB elsewhere.

If you want to find out if your company would be eligible for these proprietary tax structures, free of charge, to be agreed upon on a success fee basis only, and in doing so to benefit from my international tax experience, gained in in-depth executive tax functions in various types of tax settings, then all you need to do is to send an email to jos@merlyn.eu (or ask your CFO to do so). We take the risk of spending time on your worldwide tax matters without a return in fees. Because we know from experience that several of you will decide, after reading our analyses and seeing our answers, that working with the Merlyn Tax Solutions Group, with its new approach to international corporate tax advice, is the way you want to go forward. Just like my existing clients do. Maybe not for all tax savings projects, but for a few key ones only. After all, we are a tax boutique.

Joseph Peters MBA
Merlyn Tax Solutions Group
Wijnhaven 3R
3011WG Rotterdam
the Netherlands
www.merlyn.eu
jos@merlyn.eu