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.”

Updated on: 17/02/2026