What are the tax implications if my company incurs losses?
February 6, 2023 | 40,00 EUR | answered by Günther Köhler
Dear tax consultant,
I am the managing director of a medium-sized company and am currently facing the challenge that we have incurred a loss this year. As an entrepreneur, this is of course a worrying situation for me, as I am concerned about the tax consequences.
The current situation is that we have achieved a negative result due to various factors such as increased costs, lower revenues, and unexpected expenses. Now I fear that this may have an impact on our tax burden and would like to know from you what the tax consequences are when my company incurs a loss.
My concerns are that we may have to pay additional taxes or that this may have negative effects on our liquidity. Therefore, it is important for me to understand early on what steps we can take to minimize or optimize the tax consequences.
Therefore, my specific question to you is: What are the tax consequences when my company incurs a loss and what options are available to avoid or reduce these effects?
Thank you in advance for your help and advice.
Best regards,
Erik Wittkopf
Dear Mr. Wittkopf,
Thank you for your inquiry and I understand the concerns you have as the managing director of a medium-sized company when your company incurs a loss. It is important to understand early on what tax consequences this may have and how to minimize or optimize these effects.
When your company incurs a loss, it usually has various tax consequences. First of all, you can offset the loss against profits from previous years for tax purposes. This is called loss carryforward. This can help you save taxes in the following years, as the loss is offset against future profits.
Furthermore, a loss can also have an impact on trade tax. If your company incurs losses, this usually reduces the trade tax burden. However, there are legal regulations that must be observed in order to correctly calculate the trade tax burden.
Another point to consider are possible tax loss certificates. These are certificates issued by your tax office certifying that your company has incurred losses. These certificates can be used in certain cases for tax advantages.
To minimize or optimize the tax consequences of a loss, it is important to work with an experienced tax advisor early on. Together, you can discuss possible measures to reduce the tax consequences and secure the liquidity of your company.
I recommend that you contact a tax advisor promptly to discuss your specific situation and work together to find solutions. I am also available for a personal consultation.
I hope that this information has been helpful to you and I am available for any further questions.
Sincerely,
Günther Köhler
Tax Advisor
