All taxes or what?

Alles Steuern oder was ?

Taxes: like a sword of Damocles, they hover over companies

Taxes: like a sword of Damocles, they hover over companies; like snakes, business leaders freeze when faced with their complexity; like disasters, their avoidance is often declared as one of the central business objectives!

Indeed, we don’t have to pretend: the tax burden is increasing, as is the complexity of tax regulation. Tax competitiveness between states does the rest, in particular since national laws have been and are being adjusted according to international tax optimization options (read: tax avoidance).

As a result, one can see increases in uncertainty, in grey area tax avoidance strategies and in tax evasion. These consequences are being accompanied by a cost explosion for tax firms which often have to explain to out of their depth fiscal authorities what the international tax situation is like. Even when no taxes are due, the costs for those advisory services are born by the company. Politicians and fiscal authorities are never held accountable for their mistakes after all! Certainty for investors looks different!

However, to me the most depressing aspect seems to be the situation of the large mass of mid-size businesses that are the back bone of business after all! According to my estimates, these represent over 90% of all companies (with up to just 10 employees). These firms are not only simply unable to cope with the complexity but are also unable – unless they are set up internationally – to even participate in the international tax competition.

Of course I could “just” demand the simplification and harmonization of at least corporate income tax, wage tax and value added tax inside the European Union. But I am fully aware that, on the one side, I cannot change anything and that “only” Europe is not enough, and that, on the other hand, politicians won’t accept such a perceived disempowerment.

What remains for me and entrepreneurs, who never participate in demonstrations, is to point out those glaring problems more or less loudly, but certainly with insistence. Harmonization and simplification of the tax system will, in my opinion, not only improve transparency, decrease costs for both companies and the state, as well as increase tax honesty, but will also increase the credibility of the taxation system.

“You’ll never, ever walk alone.Walk on, walk on with hope in your heart”

You will know the song “You’ll never, ever walk alone.  Walk on, walk on with hope in your heart”. So goes the anthem of FC Liverpool on Anfield Road.

To me, this basic message is most accurate as, generally speaking, much more can be achieved by pooling diverse strengths together than by operating alone. And a most important one as well because as a business owner, that way, you send out the clear message that with team spirit a lot more can be achieved than with single, genius soloists. And to remain in the football field: why does FC Barcelona or FC Bayern Munich generally offer much better football than the Spanish or German national teams respectively, despite the fact that the majority of the players is the same. The reason is that they are not just a well-integrated TEAM, they stick together and have to do so every day.

Let me describe my x-ray vision and have a closer look at internationally active businesses. Why are some growing more than others and why are some a lot more profitable than the rest?

First, it is clear to me that companies that work on the basis of a consistent brand approach, team work and a multinational cooperation are a lot more successful. And let’s be realistic: it is just as clear to clients who are 10.000 km away, and with the same consequences.

That brings me to another factor, profitability. In my view, the most profitable internationally active businesses are the ones with the best local setup in the export country. When I really want to inform myself about another country, direct local knowledge is necessary to remain competitive. It sounds admittedly somewhat martial but the information value of my respective local network (whether Aleksey in Ukraine, Gabriel in Sao Paulo, Keisuke in Tokyo, Iwona in Warsaw or Vikal in New York) is almost always a lot more compact, realistic and to the point than what the Internet can tell me.

Going back to the FC Liverpool anthem, with just hope in the heart you cannot achieve anything, or as my father would keep telling me:  you can’t get something from nothing.  That is why everybody should build his own glocal network. Our glocal Adminex partners meeting in Cologne at the beginning of April will give us such an opportunity. Our partners are welcome to come by, with no strings attached and free of cost, introduce themselves and ask questions.

In this context, my glocal regards to all of you.

Interview in Economia Digital: “Companies have their plans ready to exit Catalonia if necessary”

The German manager who heads Adminex assures that “insecurity kills any business” 

Marc Ambrock is all sympathy and attention but he also values Germany punctuality. He has a complicated agenda, is constantly travelling and makes most of his time. He is a German entrepreneur who has his company in his genes, Ambrock, an industrial coating company with 125 years of experience behind it. Marc Ambrock, however, wanted to launch another company, Adminex, with offices in all of Europe, in Barcelona and Madrid, which helps small and medium businesses in their internationalization process.

It is his passion, because it allows him to see the peculiarities of each country, of each culture and draw different strategies. This enables him to touch his interlocutor’s arm, being fully aware that a German would not do it. But Ambrock lives in Barcelona, a city he considers as one of the best in quality of life.

And maybe for that reason, this German businessman, who is well connected with the Catalan economic and business world – he is a frequent participant in the events organized by the employers’ association Foment –, sees clearly that Catalonia’s process toward independence can be bad business for everyone. “States compete like companies and politicians need time to understand that”, claims Ambrock.

Exit strategies
First conclusion after this statement? Companies find their own ways and flee from situations of uncertainty. That is why this entrepreneur relies on his experience and assures that “many companies already have their plans to exit Catalonia if necessary; they have already developed exit strategies, even if they do it slowly”. And he adds that they are not just international companies but also Catalan ones with head offices in other parts of Spain.

Does, therefore, a real fear exist, as recently claimed by a group of German managers? Ambrock was not part of the group, who made public the so-called Declaration of Barcelona, but does support its reflections. If Catalonia becomes independent and exits the European Union, “this is a problem of great dimension which businesses cannot accept”.

France and Morocco

He adds with clarity that “insecurity kills any business”. “This is not a threat, it is a fact, and international companies will not accept to have their development capacities limited for political reasons”. Moreover, he explains, “we have all seen that the European Commission is taking more and more decisions, so we simply cannot opt out”.

In regard to the possibility of companies setting up their offices where the best opportunities are to be found, Ambrock mentions the case of France. He states that it produces fewer cars than Spain because the factories have moved to Morocco “which offers them the best conditions possible”. That is to say that there is nothing secure now, “and even more in situations of instability”.

The loss of the industry
But Marc Ambrock, very knowledgeable on Russia and the problems of Russian companies, does not want to appear as a pessimist or as opposed to just any independence movements without offering more arguments. For the CEO of Adminex the problem is that the independence ideal “is not backed by a very serious project”. And there he starts explaining his own experience at the forefront of Adminex. This entrepreneur understands that the reindustrialization plans, as described by the Minister of Business and Labor Felip Puig, will have little effect “because in this case we are late”.

Catalonia has not drawn a horizon for the future, pushing for those sectors in which it could indeed be a state-of-the-art country. He stresses that “the companies that currently show interest for Spain, the ones that we are orienting at Adminex, belong to very specific sectors such as bio-technology, medicine and information technology. They are in no way companies of the industrial world”.

Investment is coming back
He admits that Catalonia is receiving foreign investment, as the Government of Artur Mas has highlighted in the past months, but sees it as part of a recovery process of Spain as a whole. He explains, “it is true and we are noticing that investment is coming back to Spain, which is already in a process of economic recovery, and as a result, Catalonia also benefits from it”.

For Ambrock – a much-respected name in Germany for its weight in the German industry – Catalonia should take more advantage of a platform like Spain and Europe. “With dimension, by being part of something greater, you can be more competitive in global markets”, he claims. But in which sectors? He enumerates a few in which he firmly believes. “In medicine, in the aeronautical sector – with a center like Toulouse so close-by -, in bio-technology and in tourism, we should be able to be leaders”.

Yet, this entrepreneur who adores Catalonia, but whose ideal would be to have an ID “of the United States of Europe, because I am German”, warns that Catalonia’s main problem “is training”, no matter what its political future holds. Human capital is the key to compete, and in that aspect “improvement is necessary”, he concludes.

By Manel Manchón in Economia Digital ( 07/03/2014 )