Restrictions to loss relief rules in corporate tax

Restrictions to loss relief rules in corporate income tax

Restrictions to loss relief rules in corporate income tax

7 June, 2021

As of 1 January 2022, loss relief for corporate income tax will be permanently amended. This amendment was already announced in the 2021 Tax Plan and contains increases as well as restrictions with regard to loss relief rules. The amended scheme will only apply to corporate income tax.

Entering into force as of 1 January 2022

Now that the implementation test on the feasibility of the scheme has been completed and submitted to the Lower House by the State Secretary of Finance, the amendments will enter into force definitively on 1 January 2022. These amendments will first apply to financial years starting on or after 1 January 2022. The amended rules will only apply to corporate income tax. The current loss relief scheme will not change when it comes to income tax purposes.

Loss relief rules for corporate income tax

The loss relief rules for corporate income tax will be as follows:

  • the current six-year carry-forward period will cease to exist, resulting in the ability to carry forward losses indefinitely;
  • the carry-back period will not be changed and will remain one year;
  • losses can be carried forward indefinitely up to a taxable profit level of €1 million;
  • if, however, the taxable profit is higher than €1 million, a maximum of 50% of this excess may be offset against the available amount;
  • losses that cannot be fully offset during a particular year due to this restriction may be offset in a subsequent year. The same restrictions will be observed.

The new system will apply to losses from financial years commencing on or after 1 January 2013. The current rules will continue to apply for losses incurred before that date. These losses will therefore expire by 31 December 2021 at the latest.

More information

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