How are tax loss carryforwards taken into account for corporate income tax?
November 29, 2022 | 50,00 EUR | answered by Siegfried Strauss
Dear tax advisor,
I have a question regarding the consideration of loss carryforwards for corporate tax. In my company, we have incurred losses in the past few years that we would like to offset against future profits. Unfortunately, I am unsure about how exactly this process works and what regulations need to be taken into account.
Currently, the financial situation of my company is as follows: We have incurred losses in the past three years amounting to a total of 100,000 euros. However, this year we expect a profit of 50,000 euros. Now, my question is how we can claim the losses from previous years for tax purposes and whether it is possible to offset them against the current profit.
My concerns are that I fear incorrectly declaring the loss carryforward and thereby experiencing tax disadvantages. I want to ensure that we make use of all opportunities to minimize our tax burden and increase our liquidity.
Could you please explain to me how loss carryforwards are considered for corporate tax and what specific steps we need to take to correctly declare and utilize them? Are there any specific deadlines or requirements that we need to be aware of? I would greatly appreciate your expertise and assistance in this matter.
Best regards,
Paula Busch
Dear Mrs. Busch,
Thank you for your question regarding the consideration of tax loss carryforwards in corporate tax. Tax loss carryforwards can indeed be used to offset future profits for tax purposes. In your case, where your company has incurred losses in recent years and is now expecting a profit, it is important to correctly report and utilize the tax loss carryforwards to achieve tax benefits.
First and foremost, it is important to know that losses from previous years can generally be carried forward to the current year to offset them against profits. In your case, where you have incurred total losses of €100,000 in the last three years and now expect a profit of €50,000, you can offset the losses from previous years against the current profit. This will reduce your tax burden and increase your liquidity.
To correctly report and utilize tax loss carryforwards in corporate tax, you must include them in your tax return. There is usually a corresponding field or attachment where you can enter the tax loss carryforwards. It is important that you correctly report and can prove the losses from previous years to avoid tax disadvantages.
There are usually no specific deadlines by which tax loss carryforwards must be claimed. However, it is advisable to use tax loss carryforwards promptly to minimize your tax burden. Make sure to fulfill all requirements for the consideration of tax loss carryforwards in corporate tax to avoid tax issues.
Overall, it is important to correctly report and utilize tax loss carryforwards in corporate tax to achieve tax benefits. I recommend seeking support from an experienced tax advisor to ensure that you maximize all opportunities and optimize your tax burden.
I hope this information was helpful to you. If you have any further questions or need assistance, please feel free to contact me.
Best regards,
Siegfried Strauss
