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Finding a New Tax Base for German Companies after
the Abolishment of the One-Book System
Deborah Knirsch,
Otto Beisheim School Of Management Vallendar
ABSTRACT. In accordance with the German one-book system, taxable income is derived from financial accounting. Since 2005, European companies have to draw up consolidated financial statements in accordance with the IFRS. This may lead to a two-book accounting system as it is common in many other countries. In this paper, different scenarios concerning the future German tax base are discussed. A business model simulation based on empirical data from Germany is developed in order to quantify the change of the tax burden of different industries induced by alternative new tax accounting rules. Economic uncertainty is implemented using Monte Carlo simulations. I identify a simplified tax base that takes depreciation, provisions, and inventories into account. Implementing this tax base avoids major shifts in the tax burden of different industries. Showing this, the paper provides a basis for economists and politicians who decide about the new tax accounting rules in Germany.
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