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# Where to carry forward operating losses?

The **carry forward of losses** allows a taxpayer to **deduct losses from previous fiscal years** from future income, thereby reducing the amount of tax payable. This deduction is recognised as a **special expense**.

### **Applicable Taxpayers**

This mechanism applies to losses arising from:
* a **commercial, industrial, or artisanal enterprise**,
* an **agricultural or forestry operation**,
* the practice of a **liberal profession**.

### **General Conditions**

For a loss to be carried forward:
* it must be **recorded in proper accounting** (a simple record of income and expenses is not sufficient),
* it must **not have been used or offset** against other income at the time it was incurred,
* only the taxpayer who actually incurred the loss can carry it forward,
* if multiple losses exist, the **oldest losses are used first** (FIFO principle).
A **carry back of losses** is generally not permitted: it is not possible to apply a loss from one year to profits from a prior year.

**Time limits:**
* Losses incurred from **1 January 2017** can only be carried forward for a maximum of **17 years**.
* Losses incurred between **1 January 1991 and 31 December 2016** can be carried forward **without a time limit**.
Losses are only deductible if all conditions are met. Therefore, it is important to maintain **complete and proper accounting records** and **keep supporting documentation**.

### **Practical Example – Loss Carry forward**

**Situation:**
* Company ABC incurred a loss of €20,000 in 2022.
* In 2023, it generates a profit of €50,000.

**Calculation of taxable profit after loss carry forward:**
1. Profit 2023: €50,000
2. Less carried-forward loss from 2022: – €20,000
3. Taxable profit 2023: €30,000

**Note:** If ABC continues to generate profits in the following years, any unused loss (e.g., if the 2023 profit had been only €10,000) can continue to be **carried forward for up to 17 years** under current legislation.

### How to enter it in taxx.lu?
In your taxx.lu account, you can enter the loss under the section “Other” → “Operating losses.”

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