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.

Updated on: 10/02/2026