Taxation of Companies in Economic and Financial Distress

Taxation of companies in economic and financial distress
This book investigates the taxation of companies under economic and financial distress. A company in economic distress has no or low profitability and a low going-concern value. On the other hand, a company in financial distress is a viable entity with current, but not necessarily long-term, debt-paying problems. This book provides an overview of how European domestic tax systems deal with tax issues in distress, focusing on the impairment of loans and other commercial receivables, corporate tax treatment of losses, capital injections, tax deferrals and liability to pay taxes.

Why this book?

The European economy has flourished over the last decade. However, in 2020, the COVID-19 pandemic hit the world, forcing many societies to enter a total lockdown. In February 2022, Russia invaded Ukraine. Many European countries still had COVID-19 restrictions in place when their economies were struck by inflation, an energy crisis and high fuel prices. This is the context in which Taxation of Companies in Economic and Financial Distress was written.

This book focuses on the impairment of loans and other commercial receivables, the corporate tax treatment of losses, capital injections, tax deferrals and the liability to pay taxes. The analysis is based on the assumption that changes to what normally applies in the tax system to support companies in distress must be justified with good reasons in order to be legitimate. An example is the ability-to-pay principle. However, the ability-to-pay principle must be balanced with the goal of an efficient and fair tax system.

Against this background, this book examines how current European tax systems deal with companies in distress. It is divided into the following three parts. Part 1 is the General Report, which provides a broad overview and reviews the findings of the national reports. Part 2 contains three Topical Reports, which relate the overarching theme of the book to transfer pricing, VAT and State aid. Part 3 contains the national reports of 16 EU Member States and four non-EU Member States (Russia, Serbia, Ukraine and the United Kingdom). These contributions were written by distinguished European tax experts.

This book is part of the EATLP International Tax Series

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Contributor(s)

Lukas Aebi, Violeta Ruiz Almendral, Filipe Cerqueira Alves, Arthur Bianco, Martin Boer, Radim Boháč, Jane Bolander, Jan Bouwman, Linda Brosens, Karel Brychta, Giuseppe Corasaniti, Eva Cordero González, Gilles Dedeurwaerder, Edgar Drozdowski, Sabine Garroy, Danylo Getmantsev, Daniela Hohenwarter-Mayr, Claas-Constantin Hoppe, Elena Kilinkarova, Sabine Kanduth-Kristen, Dániel Máté Kovács, Eleonor Kristoffersson, Marcin Lachowicz, Inge Langhave, Fabienne Limacher, Raymond Luja, Marianne Malmgren, René Matteotti, Abhishek Padwalkar, Katerina Pantazatou, Raffaele Petruzzi, Michal Radvan, Erik Röder, Andrey Savitsky, István Simon, Zsolt Szatmári, Heydon Wardell-Burrus and Lidija Živković.

Taxation of Companies in Economic and Financial Distress
Chapter 1: Taxation of Companies in Financial and Economic Distress
Chapter 2: Topical Report: State Aid-Compliant Relief within the European Union
Chapter 3: Transfer Pricing in Relation to Businesses in Economic and Financial Distress
Chapter 4: Topical Report: The VAT Treatment of Companies in Distress
Chapter 5: Austria
Chapter 6: Belgium
Chapter 7: Czech Republic
Chapter 8: Denmark
Chapter 9: Finland
Chapter 10: France
Chapter 11: Germany
Chapter 12: Hungary
Chapter 13: Italy
Chapter 14: Luxembourg
Chapter 15: Netherlands
Chapter 16: Poland
Chapter 17: Portugal
Chapter 18: Russia
Chapter 19: Serbia
Chapter 20: Spain
Chapter 21: Sweden
Chapter 22: Switzerland
Chapter 23: Ukraine
Chapter 24: United Kingdom
Appendix: Questionnaire: The Taxation of Businesses in Financial or Economic Distress