Despite increasing digitization, tax consultants and auditors rely on personal advice.
(Photo: dpa Picture Alliance / zerocreatives)
Cologne It aims to make real estate taxation fairer. At the beginning of 2025, the new property tax reform law will come into force, which the then federal government made up of Union and SPD in 2019. So far, the tax offices have taxed properties according to unit values, which hardly reflect the very different value development of different locations and buildings.
Some of them go back to decades-old reports. There were also differences between the old and new federal states. Now, on the one hand, calculations are to be carried out uniformly and, on the other hand, on the basis of current data.
For homeowners, this means additional work this year – and thus also for tax consultants. Because January 1, 2022 was selected as the cut-off date for the data. Between July and October, these must be submitted to the state tax offices in a tax return. He expects “a flood of inquiries from clients to tax consulting firms,” says Marcus Schad, Managing Director of the social science analysis institute SWI Finance. “The combination of deadline and ignorance will create a heavy burden.”
A current study by SWI Finance supports the fear. On behalf of the Handelsblatt, SWI also surveyed more than 5,000 tax consultants and auditors online about the challenges facing the industry. 72 percent of the participants assume that the implementation of the property tax reform will result in a strong to very strong increase in the burden this year, with large law firms expecting a little more effort.
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As part of the study, SWI identified the best tax consultants and auditors in Germany. To do this, the participants had to answer technical questions – those who did particularly well made it onto the list of the best. 614 tax consulting and 116 auditing firms were awarded.
Tax consultants and auditors are even more concerned with the worsening shortage of skilled workers than the real estate tax reform. 92 percent see it as a major challenge. Last year it was 85 percent. Large law firms with more than 100 employees are particularly affected – the figure here was a good 97 percent. Suitable staff is rare, says Schad. “The demands on the employees have increased enormously.”
More specialist knowledge is required, and more and more digital skills are in demand. This pressure comes from clients as well as from the authorities. “The demand here largely outweighs the supply,” says Schad. Candidates would therefore be wooed by the law firms with additional services.
No capacity for new clients
SWI boss Schad expects in the course of digitization that the market for smaller law firms will consolidate. “Many will not be able to make the transition to the future.” The providers who succeed in modernizing must then take over the consulting volume of the closed law firms. A tour de force is imminent. “Tax consultants are already increasingly turning down inquiries from new clients because they no longer have the resources for this,” says Schad. The competition for qualified employees will intensify even further.
A lot of know-how is also required with a view to the complex German tax law. The situation is not improving – on the contrary. 66 percent of law firms stated that the legal framework is becoming more and more complicated. One consequence is growing insecurity. In the meantime, only 25 percent of those surveyed are of the opinion that they can advise their clients with legal certainty in all situations. Above all, the increasing influence of EU directives increases the complexity.
It’s not just about new laws, but also about case law, says Schad. The legal reality of European sales tax law is constantly changing, for example when it comes to questions of international trade or cryptocurrencies. “The lack of legal clarity leads to an increased effort to solve the problems safely,” says Schad. In extreme cases, there is a risk that questions arising today could only be answered with legal certainty in ten to 15 years.
Small law firms in particular complain about constant changes in the law. As a rule, they are already very busy with more everyday tax tasks, says Schad. There is hardly any time left to deal with new laws. 68 percent of those surveyed named the advancing mechanization as particularly demanding. In the previous year, however, the value was slightly higher – parts of the law firms are apparently arriving in the digital world.
A 2021 study by the Aalen Institute for Corporate Management and Aalen University examined the status of digitization in German tax consulting firms. The researchers found a huge gap between law firms that work digitally and those that don’t. Digital processes could increase the processing speed and thus save costs. 57 percent of the tax consultants surveyed stated that they also communicate with clients digitally, for example via video calls. 29 percent do without it completely.
After all, 32 percent have completely switched to electronic client files. The degree of digitization in the acquisition of new clients was particularly low. According to the authors, since tax advisory services are trust goods, personal contact is still the method of choice here.
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