Český finanční a účetní časopis 2020(3-4):25-37 | DOI: 10.18267/j.cfuc.548

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

Jan Hájek

Jan Hájek; Robert Bosch GmbH; Vysoká škola finanční a správní, Fakulta právních a správních studií, katedra správního práva a veřejné správy, Estonská 500, 101 00 Praha 10; Univerzita Karlova, Právnická fakulta, katedra finančního práva a finační vědy, nám. Curieových 901/7, 116 40 Praha 1;

ORCID ID: 0000-0002-3341-9436, .

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

JEL classification: H20, H26, K34

Received: November 3, 2020; Revised: December 3, 2020; Accepted: December 4, 2020; Prepublished online: February 4, 2021; Published: February 5, 2021  Show citation