Tax consultancy firms are at a turning point. With the wave of digitalisation, the expectations of clients, the tax authorities, talent and market competitors are rising sharply. Do small firms even stand a chance of surviving this transformation? Or do the industry giants actually benefit from their manageable size? Our guest is tax adviser Stefan Groß, a partner at the renowned Munich-based firm Peters, Schönberger & Partners – PSP for short. In an interview with Paul Liese, he discusses the opportunities currently available to law firms. And the steps that absolutely must be taken before it is too late.
Stefan Groß is a tax adviser and a CISA (Certified Information Systems Auditor). As an expert with a passion for digitalisation, he is deeply engaged with the future of tax practice. Stefan sees his core area of expertise as lying at the intersection of tax law and information technology. Stefan has been involved in the digitalisation of tax law for more than 20 years, ever since the tax authorities introduced the principles governing data access and the auditability of digital documents – known as GDPdU for short. What is taken for granted today, or at least is very widespread, was regarded at the time as a minor revolution.
Today, he focuses on tax technology – in other words, how technology can be applied in the field of taxation, both in accountancy firms and in businesses. In an issue of REthinking Tax, the expert reflected on tax consultancy in the year 2035. Stefan believes that current trends such as AI will not replace tax advisers. However, they definitely need to start engaging with digital solutions right now. The proliferation of low-code and no-code solutions means that nobody needs to know how to programme anymore.
Stefan sees the pandemic as having had a catalytic effect. Suddenly, law firms and businesses were faced with a disruption in their operations. Analogue processes suddenly had to find digital alternatives. In short: without Covid-19, digitalisation in law firms would be nowhere near as advanced as it is today. He also notes that today’s technologies at least make it possible to digitise processes. An identical pandemic 15 years ago would have caused far greater problems, as the necessary technologies did not exist at the time. He commends the legal profession for its performance so far in the digital transition.
Agile law firms have a clear advantage
Paul wants to know where law firms stand to gain – and do only the large ones benefit, or do the small ones as well, or indeed particularly so? Stefan takes a nuanced view of the question. As digital or automated solutions for repetitive tasks emerge, there is a risk that static law firms will fall by the wayside. In contrast, law firms that embrace digitalisation from start to finish are in a very different position. For example, even small firms of this kind can attract clients from across the country, as businesses are also adapting to the digital transformation. Large law firms have always been able to afford to maintain small branches everywhere. Today, small law firms can offset this competitive disadvantage through digital accessibility.
At this point, Paul interjects, pointing out that this means law firms can specialise in particular sectors, as they are no longer limited by which companies are accessible in their region. Stefan cites as a first example law firms that have specialised in a particular category of clients, such as start-ups. Paul wants to know how important the Digitalisation consultancy should play today in tax practice. The question is: Is my practice shaping digitalisation for my clients – or is someone else doing so? Stefan responds by saying that firms must ask themselves what their business model will look like in the near future. If repetitive tasks are to be automated in a few years’ time, this will free up capacity for other areas of business. However, this requires a willingness to embrace change, according to Stefan Groß.
Digitalisation and Recruitment
He emphasises that digitalisation is not a passing fad that will soon disappear. Whilst one can resist it, one can also help shape the future. In this regard, tax advisers have a major advantage over advisers from other sectors: they have an in-depth understanding of tax law. Stefan sees the combination of tax law and digital expertise as the unique selling point of tax firms. However, you also need the right people for this. According to Stefan, firms need people who take a genuine interest in digital topics of their own accord. You cannot force this interest on anyone. Only such a person can acquire the necessary expertise and later advise clients, for example, on choosing the right software system.
Stefan takes a positive view of the new FAIT (Specialist Assistant for Digitalisation and IT Processes) qualification from the Federal Chamber of Tax Advisers. He sees this as an opportunity to inspire people who have completed their training as tax clerks to pursue a career in the digital sector. Paul adds that digital consultancy also offers the advantage of not having to seek new staff exclusively within the tax consultancy sector. Generally speaking, people with an affinity for IT who are enthusiastic about digital topics are gaining new career opportunities as the tax consultancy sector embraces digitalisation. He also sees advantages in having a completely uninvolved person – someone who does not primarily look after the client in question – review the processes. This increases the likelihood of a truly neutral assessment of the workflows and the identification of areas for improvement.
Advantages and disadvantages of e-learning
When it comes to the trend towards E-learning The interviewees agree on this. Stefan emphasises, however, that the trend towards digital professional development had already gained momentum before the pandemic. Stefan’s law firm is currently setting up a new intranet with a dedicated section for e-learning. Processes such as onboarding are stored there in the form of videos. Whilst face-to-face onboarding still takes place, new colleagues can review everything again later. Stefan sees the limitations of e-learning in presentations that rely on interaction. For the future, he expects a sort of mix of e-learning and face-to-face interaction. He cannot imagine doing just one or the other.
Stefan echoes this sentiment with his belief that personal contact is particularly important in consultancy work. This skill needs to be learnt beforehand, which is difficult in a purely digital setting. At this point, Paul adds that, particularly when it comes to training in the field of digitalisation, learning how to lead discussions and facilitate meetings is also important. After all, all that specialist knowledge is of no use if you cannot convey it to the person you are speaking to.
Who should be digitising today?
What is Stefan’s advice for law firms faced with the question: ‘How should we approach digitalisation?’ First and foremost, Stefan recommends adopting a positive mindset when tackling the topic of digitalisation. This applies both to young, agile law firms and to practice owners who have only a few years of working life left and might think: ‘Why should I even bother with this topic?’ For the latter, the aim is to facilitate succession planning and, more generally, to increase the value of the practice.
Digitalisation in tax practice: How you, as a client, can benefit
Digitalisation has also made its way into the tax consultancy sector in recent years. More and more tax firms are turning to digital processes and tools to provide their clients with a more efficient and transparent service. But what does this mean for you as a client? In this article, you will discover the benefits that digitalisation brings for you and your tax firm.
Faster and more efficient processes
The use of digital tools and software allows many work processes within a tax practice to be automated. For example, accounting data can be imported and processed directly from online banking. This saves time and minimises the risk of errors. Communication between the firm and its clients is also simplified by digital solutions. Documents can be conveniently exchanged online, and queries can be resolved quickly via email or chat. For you as a client, this means your enquiries are dealt with more quickly and efficiently.
Greater transparency and control
Thanks to digitalisation, you as a client can keep track of your finances at all times. For example, you can access your accounting data and view reports at any time via an online platform. Communication with your tax consultancy also becomes more transparent, as you can check the status of your enquiries and assignments at any time. By using digital solutions, you, as a client, therefore have greater control over your finances and can react more quickly to changes.
Better advisory services
Digitalisation also opens up new opportunities for tax consultancy firms to provide advice. For example, forecasts and scenarios can be drawn up on the basis of real-time data. This enables us to provide you, the client, with better and more informed advice. Furthermore, the use of AI systems and machine learning techniques can yield new insights that are relevant to tax consultancy. Digitalisation therefore also enhances the quality of advice.
Christian Schoppe will be a guest on „hsp live at 11“ next Friday. The programme will focus on the dos and don’ts of transfer pricing documentation.
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