carryforward loss
May 11, 2011 | 40,00 EUR | answered by Oliver Burchardt
Hello tax experts,
I would like to receive answers regarding the tax treatment of the following topic:
Situation:
- From Jan. 2007 to April 2010, I worked in Sweden for a German company as an employee (taxes were paid accordingly in SE until April 2010, residence was also in SE).
- During this time, I also had a residence in Germany (at least I was registered in D).
- Since May 2010, I have been living and working as an employee again in D.
- In 2007, I had a loss from futures trading on US futures exchanges.
- In 2008, a profit was made, which does not completely offset the losses.
- In 2009, another loss was made.
- In 2010, a profit was made, but losses are still completely offset.
- Gains/losses were not reported in the declarations in SE (because of the overall loss not being tax-relevant).
Questions:
- Is it possible retrospectively to apply for a loss determination for 2007 and 2009 with the German tax authorities, and to offset the profit for 2008 and 2010 with the corresponding loss carryforward, and how should this be entered on the tax forms?
- If one submits the German declarations for 2007-2009 and reports the corresponding losses/profits, does this affect the income earned in Sweden or does it even need to be entered into the tax forms of those years?
- Should a voluntary disclosure be made for the profits in 2008 (even though they do not offset the losses from 2007) or is simply submitting the declaration with a reference to the requested loss determination from 2007 sufficient?
- Does the income from SE in 2010 (Jan-April) need to appear in the German declaration for 2010, even though it has already been taxed in SE? How does this affect the tax calculation?
Thank you for your assistance!
Dear questioner,
Thank you for your inquiry, which I would like to answer as part of an initial consultation.
Please note that the tax assessment is based on the information provided in the facts. Adding, changing, or omitting information can change the tax assessment.
Regarding the losses in the years 2007 - 2009, unfortunately, I do not see any possibility in your case to claim the losses in Germany for tax purposes. You were apparently resident in Sweden according to the Germany-Sweden double taxation agreement, so there was no tax liability in Germany during that time. Due to the lack of tax liability, the establishment of a carryforward loss is also excluded, regardless of whether this would have been possible from a tax perspective.
You must declare the income you earned in Sweden in 2010 in your tax return in Germany. At the same time, you must attach proof from the Swedish tax authorities that this income has already been subject to taxation in Sweden, as according to Article 15 of the Germany-Sweden double taxation agreement, the taxing authority lies with the Swedish tax authorities.
For the tax calculation, the income that has already been taxed in Sweden is deducted from the taxable basis, so you do not have to pay taxes on it again. Unfortunately, the so-called progression clause applies here. Here's what happens: The tax rate applicable to your income to be taxed in Germany is determined taking into account the income earned in Sweden. This tax rate is then applied to the income earned in Germany. Therefore, a portion of the income earned in Sweden is subject to taxation in Germany in practice.
I hope my explanations have been helpful to you.
Best regards,
Oliver Burchardt
Tax consultant
