Hackathon on the digitalization of tax law took place with mgm participation

In November 2023, the second hackathon of the Center for Digitalization of Tax Law at Ludwig-Maximilians-Universität München (LMUDigiTax) took place. This took place in cooperation with the Chair of Legal Tech at the Technical University of Munich (TUM) and the Federal Ministry of Finance (BMF). The topic of the event was “Digital-compatible tax laws using the example of the special depreciation for heat pumps”. In cooperation with mgm, Capgemini was in charge of preparing a draft of an enforcement-oriented standard for the special depreciation of heat pumps. This was in turn technically implemented by mgm in cooperation with Capgemini using the Enterprise Low Code platform A12.

In preparation for the second LMUDigiTax hackathon, all four participating project teams were given a specific task. The aim of the task was to draft a standard for the special depreciation of heat pumps – ideally including a digital solution. To this end, mgm and Capgemini jointly created a draft of an enforcement-oriented standard for the special depreciation of heat pumps. Capgemini was responsible for the initial creation of the standard, which served as the basis for the modeling. The initial technical implementation was carried out by mgm using the Enterprise Low Code platform A12. mgm and Capgemini sparred cooperatively to make further adjustments to the technical implementation, so that the technical implementation ultimately mapped the standard that had been created.

The creation of the standard

Before developing the standard to be implemented, it was placed in the context of the Income Tax Act (EStG). For this purpose, the standards of §§ 7 ff. EStG were analyzed so that the standard to be created could be placed logically in the context of the regulations on depreciation for wear and tear (AfA)/depreciation. This resulted in the regulation that only Section 7 (1) EStG could be relevant in addition to the standard to be created. To ensure that the standard is also easy to understand for technical implementation, it was divided into five paragraphs. The first paragraph describes the system of the standard. The second paragraph defines the personnel requirements and the third paragraph the factual requirements. The fourth paragraph regulates the calculation of special depreciation. The fifth paragraph then sets out the formal requirements, such as the taxpayer’s obligation to provide evidence, which must be met in order to claim the special depreciation allowance.

When drafting the standard, technical approaches were used to structure the standard for algorithmic processing on the software side. The aim was to define clear conditions (factual requirements) as well as validations and calculations (legal consequences) that are formulated in an orderly manner. In particular, “if-then statements” were used to put the logical structure of the standard text into a form that is accessible for algorithmic processing.

Technical implementation with low code

The basis for modeling the data and form model was the first draft of the standard. The formalization process was carried out using the Enterprise Low Code platform A12. This gives technical experts the opportunity to implement (tax) technical content directly in software as part of model-based software development using a Domain Specific Language (DSL). The basis for this is the model-based development approach, which goes hand in hand with the separation of technology and expertise. A12 is used by the tax authorities in particular in the KONSENS specialist procedure ELSTER.

Four model types of the A12 modeling platform were used for the technical implementation:

• Document model: It contains various field types as well as validation and calculation rules of varying complexity. These are mapped in a group hierarchy for organization and a better overview.
• Form model: The structures and content of the user interfaces are defined here. Forms consist of general UI elements such as input fields, buttons, labels, checkboxes, etc. The modelling tools offer powerful options for organizing the elements.
• Overview model: It enables the tabular display of several entries of the check for special depreciation in an overview. Existing entries can be selected and opened from this overview and new entries can be created.
• App model: The model defines the framework of the application and acts as a container model for the aforementioned models.

There is also the A12 modeling tool, the Simple Model Editor (SME). This allows the creation and modeling of the aforementioned models.

The functions of the application

The application can use the information to determine whether the requirements for special depreciation are met. If these are not met, the points that were decisive for the rejection are listed. If the requirements are met, the application calculates the amount of the special depreciation and allocates it (if applicable) to several participants.

In addition, in special cases, such as the inflow of development funds, the application can make an exact allocation of these to the participants – depending on the respective participation amounts – and issue a reduced special depreciation allowance in a clear table. In addition to issuing the special depreciation, the straight-line annual depreciation can be issued, reduced to the remaining months of the year in the case of acquisition during the year and the beginning and end of the normal useful life of 10 years (see Section 82a (1) No. 2 EStDV) can be individually reflected depending on the time of acquisition.

Collaboration as a success factor

After completion of the models, the project team discussed ambiguities and loopholes in the draft and the models in joint review processes. Both were continuously adapted and the technical implementation was supplemented with additional models. This iterative process enabled the standard and the models to be continuously developed and at the same time ensured that the wording could be designed in such a way that it was clearly understandable for modelers (and programmers).

The insights gained from this overall process underline the experience in individual software development that subject matter experts and technical implementers should work together collaboratively in order to consistently implement (tax) expertise in software.

The organizers of the hackathon are working on an analysis of the findings of all participating teams. The results are expected to be published shortly.

The project team

• Franz Halimi, Business Analyst at Capgemini, was responsible for drafting the standard.
• Kolja Klein, business analyst and modeler at mgm, was responsible for modeling with A12.
• Uli Weber, Tax Lead in Public Finance at ei Capgemini was available as a sparring partner.
• Janos Standt, Head of Public Sector at mgm, was available as a sparring partner.

Further information:

• Website: LMUDigitax
• Website: A12
• Website: Use of A12 in tax law