Companies need to consider whether the financial consequences of the coronavirus (COVID-19) pandemic must, can and/or may already be taken into account (for tax purposes) in the 2019 financial statements.
In accordance with the periodicity principle, expenses and income are to be allocated to the period (financial year, tax year) in which they were incurred. The formation of provisions can also take account of future outflows of funds, lower inflows or reductions in value. Whether a provision is to be set up is determined at the time of the balance sheet date, for example 31 December.
If the triggering event (i.e., the cause of a future cash outflow, lower inflows or reductions in value) already exists at the balance sheet date, a provision is to be charged to the financial statements. For this purpose, information may also be used which only became known after the balance sheet date. However, if the triggering event has occurred after the balance sheet date, its expected effects must be disclosed in the notes to the financial statements.
Provisions charged to the annual financial statements are, if they comply with commercial law, also relevant for tax purposes (so-called authoritative principle of the commercial balance sheet). Corrections by the tax authorities are only made to the extent that the commercial balance sheet obviously violates mandatory commercial law or tax law has a corrective norm, which applies in particular to expenses, depreciation and provisions that are not justified under commercial law.
Within the framework of cantonal support measures, the cantons of Zug and Valais, for example, have decided to make concessions by recognizing additional provisions (COVID-19 provisions) for tax purposes.
In concrete terms, Zug and Valais companies that suffer directly or indirectly from the negative effects of the virus may set aside extraordinary provisions in the 2019 financial year. These provisions must be released again in the 2020 financial year.
The Canton of Aargau also allows additional "COVID-19 provisions" in the 2019 financial year.
Read an April 2020 report prepared by the KPMG member firm in Switzerland
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