Can I offset losses from previous years against corporate tax?
May 11, 2022 | 40,00 EUR | answered by Mia Köhler
Dear Tax Advisor,
I am Siegfried Hartmann, the managing director of a GmbH. In recent years, we have incurred losses due to various circumstances. Now I am wondering if I can claim these losses for corporate tax purposes.
The situation is that our GmbH has recorded losses in the past three years. These losses have accumulated to a significant amount. I am concerned that these losses may not be able to be utilized, resulting in us experiencing tax disadvantages.
Therefore, my question is whether and how I can claim these losses from previous years for corporate tax purposes. Are there ways to offset these losses with profits from the current year in order to save on taxes? What legal regulations need to be considered and what steps do I, as the managing director, need to take to correctly utilize the loss carryforwards?
I would be very grateful if you could provide me with detailed information and recommendations on this matter. It is important to me to achieve the best possible tax situation for our GmbH and not to miss any opportunities.
Thank you in advance for your support.
Sincerely,
Siegfried Hartmann
Dear Mr. Hartmann,
Thank you for your inquiry regarding the carryforward of losses in the corporate tax of your GmbH. I understand that you are concerned about how to utilize these losses to avoid tax disadvantages and save taxes.
In principle, it is possible to offset losses from previous years in the corporate tax. This is done through the option of loss carryforward. This means that losses incurred in previous years can be offset against profits from the current year to reduce the tax burden.
The legal regulations for loss carryforward can be found in the Corporate Tax Act (KStG). It is stipulated that losses from previous years can be carried forward for a certain period of time and offset against profits. This period is usually up to five years, and in some cases even up to seven years.
To correctly utilize the loss carryforwards, as the managing director of your GmbH, you must declare the losses in the corporate tax return of the current year. It is important that you carefully retain all documents and evidence of the incurred losses from previous years and be able to present them when needed.
It is advisable to seek advice from a tax advisor to ensure that the loss carryforwards are correctly applied for and utilized. A professional can also help you achieve the best possible tax situation for your GmbH and not miss out on any opportunities.
Overall, it is possible to claim losses from previous years in the corporate tax and offset them against profits from the current year to save taxes. However, please adhere to the legal regulations and seek professional assistance if necessary.
I hope this information has been helpful to you. If you have any further questions or need assistance, please feel free to contact me.
Sincerely,
Mia Köhler
Tax advisor
