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The following document sets out the position in relation to tax in the UK and represents how tax is undertaken within the business. The strategy applies to the UK branch of VW Bank GmbH (‘the UK branch’).
The UK branch manages its tax affairs based on 5 core principles:
The fundamental principle underlying all the tax decisions within the UK branch is that of paying the right amount of tax in the right place at the right time. This is mandated at a global level by the Board of Management. It involves disclosing all relevant facts and circumstances to the tax authorities and claiming reliefs and incentives where these are made available by tax legislation.
2. Open and transparent approach to engaging with HMRC
The UK branch seeks to build transparent and collaborative relationships with the UK tax authorities to create and maintain “Good Corporate Citizenship.” It aims to achieve this by engaging with HMRC with honesty, integrity, respect and fairness.
HMRC is kept informed about business developments to the extent they have a tax impact, at regular face-to-face meetings. These meetings are also used by both parties to discuss matters relating to the companies’ tax affairs at the earliest opportunity.
In the event that a disclosure is required, these are made voluntarily or with full co-operation from the business.
3. Management of Tax
Ultimate responsibility for the tax affairs of the UK branch sits with the Board of Management.
The tax affairs of the UK branch are managed through a service level agreement with the tax team at Volkswagen Financial Services (UK) Limited (‘VWFS’). Under this agreement, the UK branch receives both UK tax compliance and UK tax advisory services.
VWFS has a dedicated tax team who are professionally qualified and cover both direct and indirect tax matters. VWFS supports the tax team in maintaining their Continuing Professional Development requirements. The team also comply with the ethical standards set out by the Chartered Institute of Taxation.
4. Risk Management
Given the size and global nature of the business, tax risks will arise. The VWFS in-house tax team is appropriately skilled to handle these matters, participating in web based training and reviewing professional tax publications and alerts to ensure tax knowledge is kept up to date. This enables the tax team to identify, monitor and manage tax risks within the business. It also enables the team to identify where specialist external advice is required to ensure the business can remain compliant. External advisors are used to assist the business in achieving its core tax principles as outlined in this document.
5. Attitude to arranging our tax affairs
Volkswagen’s primary tax objective is to pay the correct amount of tax at the point at which it is properly due. The UK branch will utilise exemptions and reliefs that are legitimately available and in accordance with the wording and spirit of the law.
The UK branch is mindful of its reputation in the marketplace and seeks to operate in a manner of a responsible taxpayer.
Transactions between group companies are conducted at an arm’s-length basis and in accordance with OECD principles. The UK branch does not undertake profit allocation on the basis of tax rates, and profit follows the business activities of the UK branch.
Where tax incentives are implemented by the Government to support investment, employment and economic development, the UK branch will only ever seek to implement these in the manner intended.
Engagement in artificial tax arrangements (those without commercial substance) is not undertaken. Where a point is unclear or uncertain, the UK branch may seek clarification from HMRC or the judiciary, as appropriate. This is done in order to ensure that the UK branch complies with its primary tax objective. Tax is not the commercial driver for decision making within the UK branch, nor a key performance indicator.
The UK branch regards its publication of the tax strategy as compliant with the duty under Schedule 19, Part 2, paragraph 22(2), Finance Act 2016.
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