Accounting and taxation for Goodwill

: an international comparative analysis

Abstract

Despite Goodwill being a significant asset in companies’ Financial Statements, this intangible asset has never been consensual, raising discussions since the early 20th century regarding its concept, form and recognition mechanisms in accounting. Considering the wide variety of Goodwill measurement options, regulators tend to choose between: (i) amortise Goodwill during its defined or preestablished useful life, or (ii) do not amortise it, recognising impairment losses, if necessary, not existing consensus. In addition to this accounting issue, there is the taxation problem: should tax laws accept the deductibility of expenses incurred with the amortisation of Goodwill? The purpose of this MFA is, therefore, to compare the treatment of Goodwill in fifty jurisdictions, taking into account three dimensions: (i) international accounting standards; (ii) local accounting standards and; (iii) rules on deductibility in corporate income tax, forming practices’ groups and determining the presence of global standards or blocks of operation regarding the rationales adopted. This analysis is carried considering a qualitative method of comparison. The results tend to conclude that practices, both at the accounting and tax levels, are aligned in accordance with international pressures. Furthermore, the existence of a European Union with its own regulations is proof of an alignment in terms of accounting practices. Moreover, the harmonisation of local taxation is a slow process, since countries do not want to lose authority over the direct taxation. This work also includes a case study that aims to clarify the impact of the choice of accounting standards on companies' financial statements. Although limited, the comparative analysis that this work provides brings new tools for discussion, elucidating the lack of consensus that exists regarding Goodwill practices, suggesting possible future developments in regulatory frameworks

Date of Award	3 Jul 2025
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Ricardo Cunha (Supervisor)