Philip Dekker trained at Freshfields, before moving in-house at Philip Morris, where he spent a stint in Switzerland. He then worked as Senior Legal Counsel at a marketing, consulting and technology company, before moving to the Netherlands, where he currently works as Senior Managing Counsel at Booking.com. This role also involved a stint as Global Head of Legal at one of Booking.com's subsidiaries, a scaling technology business serving the travel industry.
What do tax lawyers do?
Almost every transaction will have tax implications. In fact, tax considerations are often the driving force behind deal structures and timelines. Tax lawyers (alongside external specialist tax advisers) are therefore regularly brought in to advise on the tax aspects of deals. These aspects might include the tax-related risks and challenges, the corporate structures that the parties intend to use to execute a deal, tax warranties and indemnities that the parties wish to include in the transactional documents, and the broader tax reliefs and efficiencies that might be available.
Tax lawyers may also help to determine the way in which deal should be structured (for instance, whether from a tax perspective the parties should pursue a share sale or an asset sale, or whether “special purpose vehicles” should be used as part of the transaction structure), the methods of financing that would be the most tax-efficient (e.g. using cash reserves, debt, equity or a combination), and the way in which consideration should transfer from the buyer to the seller and then (if applicable) filter through the seller’s corporate group.
Tax lawyers also sometimes advise on tax disputes and assist with investigations initiated by tax authorities (e.g. HMRC), which may involve challenging tax liabilities on behalf of clients or assessing whether clients’ tax structures are illegal or abusive (through analysing the many different statutes, rules and regulations that apply to tax).
Examples of ways in which companies can try to minimise their tax liabilities include: borrowing money from subsidiaries in more tax efficient jurisdictions and paying high interest rates in return; paying large franchise fees to franchisors based in more tax efficient jurisdictions; or paying inflated prices when acquiring goods from subsidiaries along the supply chain in more tax efficient jurisdictions.
These strategies effectively enable companies to reallocate or reroute profits from subsidiaries (or other companies within the same group) in jurisdictions with high corporate tax rates to other subsidiaries (or companies within the same group) that are incorporated in - and thus pay tax in - jurisdictions that offer more favourable tax rates. This approach means that there is consequently less “profit” available to be taxed in jurisdictions with higher tax rates.
Special Purpose Vehicle (SPV): a legal entity (known as a “shell company”) created to serve a particular function. Companies may include special purpose vehicles within their corporate structures in order to absorb financial risk or reduce tax liabilities, for instance through registering them in tax havens such as the Cayman Islands, Jersey, Guernsey or Luxembourg.
Why do trainees enjoy tax seats?
Tax teams tend to carry out a mix of advisory and contentious work, including transaction structuring, litigation and investigations by tax authorities. This means that a seat in a Tax team can offer ample variety. The work carried out tends to be more “law heavy” than the work carried out in some of the other practice areas as it can involve regularly researching into and negotiating complex tax legislation. A tax seat could therefore appeal if you enjoy technical legal research and intellectually challenging “black letter” law.
Note that we cover the role of tax lawyers in the context of a transaction in our A law firm's role on a transaction case study.