How can I claim losses for tax purposes?
July 7, 2024 | 50,00 EUR | answered by Benjamin Hohenadel
Dear tax consultant,
My name is Ben Sauer and I am the managing director of a small company. In recent years, we have unfortunately incurred losses and I am now wondering how I can claim these losses for tax purposes.
The situation is as follows: Over the past three years, our company has experienced losses due to various circumstances. This affects both our revenue and profits. I am concerned that these losses could have a negative impact on our company's tax burden. Therefore, I am looking for ways to optimize the tax treatment of these losses.
Currently, we have not taken any measures to claim the losses for tax purposes. However, I am confident that there are various ways in which we can utilize these losses to reduce our tax burden.
My concern is that we may be missing out on tax benefits by not properly utilizing the losses. That is why I would like to know from you what specific steps we can take to claim the losses for tax purposes and what impact this will have on our tax burden.
My specific question is: How can I claim the losses that our company has incurred in recent years for tax purposes and what are the options to reduce our tax burden?
Thank you in advance for your assistance.
Sincerely,
Ben Sauer
Dear Mr. Sauer,
Thank you for your inquiry regarding the tax deductibility of losses in your company. It is understandable that you are concerned about how these losses will affect your tax burden and how you can optimally utilize them. I would be happy to explain the various options for tax offsetting of losses to you.
First of all, it is important to know that losses from previous years can generally be offset against profits from the current or future financial years. This is called loss carryforward. The losses therefore reduce the tax burden in the years in which profits are made. This can result in your company having to pay less taxes for those years.
To implement the loss carryforward, you must submit a corresponding application in your tax return and claim the losses accordingly. It is important that you calculate and can prove the losses correctly. Therefore, it is advisable to keep the documents and accounting carefully and, if necessary, consult a tax advisor to ensure that everything is done correctly.
Furthermore, there is the option to offset losses against other income. For example, if you have other income in addition to your company, the losses may also be offset against this income under certain circumstances.
Additionally, it is possible to offset losses within a group of companies, if your company is part of a corporate group. In this case, the losses can be offset between the affiliated companies, which can reduce the overall tax burden.
In summary, there are various ways in which you can claim the losses of your company for tax purposes in order to reduce the tax burden. It is important to be aware of these options and to use them accordingly to not miss out on any tax benefits.
I hope this information is helpful to you and answers your question. If you have any further questions or need assistance, I am happy to help.
Sincerely,
Benjamin Hohenadel, Tax Advisor
