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Effect of tax deductibility on technical reserves recognized by Czech and Slovak insurance companies

Vliv daňové uznatelnosti na výši technických rezerv tvořených českými a slovenskými pojišťovnami

Jan Hájek

Český finanční a účetní časopis, 2020, vol. 2020, issue 3-4, 25-37

Abstract: The paper describes the influence of a tax law on the technical reserves recorded by the Czech and Slovak insurance companies. Specifically using technical reserves to insurance payments respectively to liabilities ratio it verifies whether the rules covered by the respective tax law might have influence the values of the technical reserves created. The Czech and Slovak insurance companies were chosen due to their different tax regime for the whole analyzed period (2010 - 2018). Whereas the Slovakia linked the amount of tax deductible technical reserves to the Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009, the Czech tax law allowed to deduct from the corporate income tax base any value reasonably justifiable. The results of the statistical analysis indicate influence of the tax regime of the technical reserves deductibility as the Czech insurance companies were achieving significantly higher values of the technical reserves to insurance payment ratio in comparison to the Slovak insurance companies where the tax regime had been stricter.

Keywords: Technical reserves; Corporate income tax; Czech Republic; Slovakia; Technické rezervy; Daň z příjmů právnických osob; Česká republika; Slovensko (search for similar items in EconPapers)
JEL-codes: H20 H26 K34 (search for similar items in EconPapers)
Date: 2020
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Český finanční a účetní časopis, Vysoká škola ekonomická v Praze, nám. W. Churchilla 4, 130 67 Praha 3

DOI: 10.18267/j.cfuc.548

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Handle: RePEc:prg:jnlcfu:v:2020:y:2020:i:3-4:id:548:p:25-37