The Tax Treatment of Losses: Options for Reforms During the Corona Crisis

Abstract Due to the corona pandemic, many companies will suffer losses in 2020. The German tax system treats profits and losses asymmetrically: Whereas profits are taxed immediately, losses do not generate immediate tax refunds. This article discusses different options to improve the tax treatment o...

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Bibliographic Details
Main Authors: Reinald Koch, Dominika Langenmayr
Format: Article
Language:deu
Published: Springer 2020-05-01
Series:Wirtschaftsdienst
Online Access:https://doi.org/10.1007/s10273-020-2657-8
Description
Summary:Abstract Due to the corona pandemic, many companies will suffer losses in 2020. The German tax system treats profits and losses asymmetrically: Whereas profits are taxed immediately, losses do not generate immediate tax refunds. This article discusses different options to improve the tax treatment of companies in loss situations. A microsimulation of these reforms reveals that extending the maximum amount for loss carry-back has a larger impact than extending the loss carry-back period. Enhancing loss carry-back opportunities also creates strong investment incentives.
ISSN:0043-6275
1613-978X