On Twitter, Google’s John Mueller confirmed that you can use umlauts such as ä, ö or p in internal links. You do not have to use punycode. So it’s okay to link to http://römtömtömtöm.com instead of http://xn--rmtmtmtm-n4accc.com/ (which is basically the same URL):
They're all equivalent – use whatever works best for you ?
— ? John ? (@JohnMu) April 17, 2019
You can check the URL structure of your website with the website audit tool in SEOprofiler:
