What fiscal corrections increase the tax base?

Disallowed expenses

Expenses are mainly disallowed if and to the extent that:

• they are not vouched for by proper documentation
• their deductibility is limited for tax purposes (e.g. car costs, restaurant and reception costs, social benefits)
• they are deemed excessive (not at arm’s length)

Expenses that are non-deductible are added back to the tax base, but can e.g. generally be offset by any tax losses.

Timing differences

Certain accounted costs (e.g. likely liabilities and charges) can be temporarily disallowed from a tax point of view (e.g. where they are not specific), thereby increasing the tax base.

If and to the extent that the conditions for deducting such costs are met at a later stage, the tax base is reduced accordingly.

Subject to specific conditions, a company can allow for a temporary tax-free reserve for certain accounted income (e.g. expressed but unrealised capital gains) and therefore temporarily reduce its tax base. If and to the extent that the conditions necessary for this temporary exemption are no longer met, the tax base is increased accordingly.