Tax Loss Offset Restrictions - Last Resort for the Treasury?: An Empirical Evaluation of Tax Loss Offset Restrictions Based on Micro Data

Nadja Dwenger

No 764, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: In Germany, the tax loss carry-forward of corporations significantly increased over the last decade. At the same time only a small percentage of losses have been effectively offset in the following periods. One potential reason for this puzzle is that stricter loss offset restrictions have been introduced in recent years. I use a newly developed micro simulation model for the corporate sector in Germany to evaluate the fiscal effects of these restrictions. Additionally, distributional breakdowns concerning the amounts of tax loss carry-forward and the effects of loss offset restrictions are provided. I find that the restrictions on the use of tax loss carryback are rather ineffective while the newly introduced minimum taxation considerably increases yearly tax revenue by 1.1 billion €.

Keywords: Micro simulation; loss offset restrictions; corporate taxation; tax loss carryforward; tax loss carry-back; tax reform (search for similar items in EconPapers)
JEL-codes: C8 H25 (search for similar items in EconPapers)
Pages: 19 p.
Date: 2008
New Economics Papers: this item is included in nep-cmp, nep-eec, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Working Paper: Tax loss offset restrictions: Last resort for the treasury? An empirical evaluation of tax loss offset rectrictions based on micro data (2008)
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