The Interplay Between ESG Reporting and Tax Audits in the Era of Digital Transition

This chapter investigates the evolving interplay between mandatory sustainability reporting, artificial intelligence, and tax audits within the broader framework of the European twin transition. The analysis commences from the expansion of corporate sustainability disclosure obligations under the CSR Directive and the implementation of the European Sustainability Reporting Standards, which have progressively aligned the reliability of ESG data with that of financial data. Such assured information, while enhancing the evidentiary base of tax audits, also raises crucial questions of legality and procedural fairness, particularly when employed in inferential reasoning or automated assessments. Building on the theoretical framework of procedural fairness, the chapter explores the dual role of ESG data as both an evidentiary resource in audits for tax administrations and a safeguard for taxpayers, thereby reshaping evidentiary standards.