Losses can be carried forward and can be offset with future profits for a 5-year period.
Losses considered to be of Argentine source can be offset only with profits considered to be of Argentine source. Losses considered to be of foreign source can only be an offset of foreign-source profits.
Company tax losses can be carried forward indefinitely, subject to satisfying certain loss utilization tests.
For the 2022-2023 income year, eligible companies with annual turnover of less than AUD5 billion may also carry-back tax losses from the 2019-20, 2020-21, 2021-22 and/or 2022-23 income years to offset previously taxed profits in the 2018-19 or later income years, subject to satisfying the relevant requirements and integrity measures.
Tax losses (resulting from operating revenues) may be carried forward for an indefinite period of time and may be offset against both trading income and capital gain. However, for corporations, only 75 percent of current income may be offset against tax losses brought forward; thus, 25 percent of current income is invariably subject to tax.
This limitation does not apply to individuals. Excess tax losses can still be carried forward. Loss carrybacks are not permitted.
Losses may be carried forward indefinitely, but their use in a given tax year is limited to EUR1,000,000 plus 70 percent of the taxable basis in excess of EUR1,000,000. Any carried-forward tax losses that cannot be used due to this limitation may be further carried forward indefinitely. The remaining 30 percent of the taxable basis in excess of EUR1 million will be subject to normal corporate income tax rates.
As of income year 2023 (assessment year 2024), the 70-percent threshold has been reduced to 40 percent to increase the minimal taxable basis to 60 percent instead of 30 percent. This measure is temporary, as regulators intend to abolish this measure as soon as the global minimum tax rules (OECD Pillar Two) enter into force in Belgium.
Under the actual profits method, net operating losses generated in a given period/year can be used to offset up to 30 percent of the taxable income the accrued on the subsequent periods/years.
Non-capital losses may generally be carried forward 20 taxation years and back 3 taxation years, subject to certain loss limitation rules. Net capital losses may generally be carried forward indefinitely and back 3 taxation years, subject to certain loss limitation rules.
Net operating losses can be carried forward indefinitely to offset CIT liability. However, there are restrictions for the utilization of losses in case of change of ownership. Loss carryback is still possible when a company with losses receives dividends from a subsidiary. However, it will be terminated, progressively, from 2020 until 2024.
Loss can be carried forward for 5 years in general, and may be extended in limited scenarios, for example, 10 years for certified High and New Technology Enterprises.
Utilization of tax losses depends on whether such losses were obtained before 2017:
- Tax losses generated before 2017 can be offset with ordinary taxable income obtained in any of the subsequent fiscal years.
- Tax losses generated as of 2017 can only be offset with ordinary taxable income obtained in the twelve subsequent fiscal years.
Carry-back of losses is not permitted. Capital losses cannot be offset against ordinary income.
Tax losses can be carried forward up to 10 years. Changes in the ownership of a company with tax losses carried forward results in forfeiture of tax losses, but Finnish tax authorities may, upon application, grant an exception to utilize the losses.
Operating losses can be carried forward without time limitation but with a utilization cap per financial year of EUR1 million plus 50 percent of the taxable profit of the current financial year. Losses can be carried back only for the previous financial year, with a EUR1 million cap.
Carryforward: Losses may be carried forward indefinitely.
Carryback: Losses up to an amount of EUR 1 million can be offset against the profits of the preceding year. Losses for trade tax purposes cannot be carried back.
The maximum amount limits for loss carrybacks have been increased from EUR 1 million to EUR 5 million for losses from the year 2020 onwards, and the maximum loss carryback amounts to EUR10 million for the year 2021 onwards. It is envisaged that, from the tax assessment period 2024, the old limit of EUR1 million will apply again.
Minimum taxation: 40 percent of the income exceeding EUR 1 million cannot be sheltered by tax loss carryforwards, but instead is subject to taxation at regular rates.
Hong Kong, SAR
Losses attributable to the operation of the trade, profession or business carried on in Hong Kong can be carried forward indefinitely to offset against future assessable profits until fully utilized. Where a taxpayer carries on multiple trades, profession or businesses in Hong Kong, the losses in one can be utilized against the profits of the other.
However, losses cannot be carried back to offset against assessable profits in prior basis periods.
Tax losses may be carried forward for 5 years from the year in which they incurred. Losses carried forward from previous tax years may only be used to offset 50 percent of the current year’s profit. Losses must be deducted in the order they were sustained. Losses generated by the last day of the 2014 tax year which have not yet been used can be utilized in line with the provisions effective on December 31, 2014 and are available to be utilized by December 31, 2030.
Business or Profession losses may be carried forward 8 years. However, unabsorbed depreciation may be carried forward indefinitely. Business losses may be carried forward only where tax return is filed by the due date. Short-term capital loss may be set off against both short term and long term capital gain. However, long-term loss may be set off only against long term gain. In the case of a closely held company, such as a private limited company, carrying forward and setting off of losses will not be permitted unless shares of such company carrying not less than 51 percent of the voting power were beneficially held by same persons both in the year in which losses were incurred and the year in which the losses are sought to be set off.
Relief for trading losses is available by way of set-off against all other relevant trading income of the company in the same period and of the immediately preceding accounting period of equal length. Relevant trading losses can also be used to shelter foreign dividends which the company elects to tax at 12.5 percent. Any remaining trading losses can be set-off against all other income and profits of the company in the accounting period and in the immediately preceding accounting period of equal length on a value basis. Unused trading losses may be carried forward indefinitely for offset against future income of the same trade.
A member of a group of companies may surrender current year trading losses to another group member. A number of conditions must be met for group relief to be available (eg, corresponding accounting period, 75-percent subsidiaries and tax resident in a member state of the EU).
There are different utilization rules for current and carried-forward net operating losses and capital losses. Both capital losses and net operating losses which were not utilized in the current tax year may be carried forward indefinitely. Carry back of losses is not available.
Tax loss can be carried forward without any time limitation but can be used to offset only up to 80 percent of taxable income. Tax losses incurred in the first 3 years of activities can be used to entirely offset subsequent years' taxable income. Tax losses cannot be carried back.
Net operating losses may be carried forward 10 years. Only small and medium-sized enterprises with capital of JPY100 million or less and whose parent's capital is less than JPY500 million can carry back its losses to the preceding year. Also, except for small and medium-sized enterprises, the utilization of the net operating loss carried forward is subject to the following caps: 80 percent of the taxable income for the fiscal years beginning on or after April 1, 2012; 65 percent for the fiscal year beginning on or after April 1, 2015; 60 percent for the fiscal year beginning on or after April 1, 2016; 55 percent for the fiscal year beginning on or after April 1, 2017; and 50 percent for the fiscal years beginning on or after April 1, 2018.
Carryforward: Losses generated from January 1, 2017 can be carried forward for a maximum period of 17 years.
Point of interest: Losses generated before this date are not subject to these limitations and may be carried forward indefinitely.
Carryback: Not applicable for this jurisdiction.
Net operating losses can be carried forward 10 years, but no carryback is allowed.
Tax losses assessed in a certain financial year are, in general, deductible from the taxable profits, if any, of 1 or more of the 5 subsequent financial years.
As of January 1, 2022, the loss utilization rules are limited to 50 percent of the taxable profits. However, tax losses up to EUR 1 million may be utilized in full. In conjunction with the limitation on the utilization of tax losses, the carry-forward period is made indefinite. The carry back period is 1 year. In addition, there are special rules which deny the utilization of tax losses in case of significant changes of ownership of a company.
Unused losses may be carried forward without limit. Disallowed interest deductions (see Taxable income) can be carried forward for 10 years.
Peruvian tax law provides that the losses generated by a Peruvian-based company may be compensated with the taxed income of the following fiscal year(s). In this sense, there are 2 systems that may be chosen by taxpayers in order to undergo such compensation:
- System A: the losses that have been generated in a certain fiscal year can be offset against the total net income until the amount is exhausted. However, such losses could not be offset in the following 4 years – they would instead expire.
- System B: the losses generated in a certain fiscal year can be compensated against 50 percent of the following periods until the amount is exhausted without any time restriction.
Once an option is selected, it can only be changed after all the losses are used or terminated. Peruvian tax law does not allow carryback losses. According to Peruvian income tax law, there is no difference between ordinary and capital losses.
Losses may be carried forward for 5 years. The deduction may not exceed 50 percent of loss incurred in a given year but, in addition to the 50-percent limit, a PLN5 million loss may be settled in 1 of 5 years. Losses cannot be carried back. Losses incurred from a given source (capital gain or other sources) may be settled only with income from that source.
Starting from January 1, 2021, losses of a taxpayer who acquired an enterprise/organized part of enterprise or took over another entity (via a merger) cannot be deducted:
- if the scope of the core business activity carried out by the taxpayer differs from the scope of the core business activity which had been conducted by the taxpayer before the acquisition (merger), or
- when at least 25 percent of shares of the taxpayers are held by entity or entities which did not have these rights at the end of the tax year in which the taxpayer incurred loss.
Net operating losses can be carried forward without any time limitation but can be used to offset only 65 percent of the taxable income.
Due to the COVID-19 pandemic, net operating losses generated in 2020 and 2021 may be used to offset 75 percent of the taxable income (instead of 65 percent).
Fiscal losses can be carried forward for seven consecutive years and offset against future profits. Losses can also be transferred within reorganization processes, such as mergers, spin-offs, etc.
Russian tax rules allow tax losses to be carried forward for an unlimited period, but for financial years from 2017 to 2021, the taxpayer may reduce the tax base by such losses to the amount of no more than 50 percent.
Losses from the sale of securities may be credited only against future income from the sale of the same type of securities. Losses from the disposal of fixed assets are recognized evenly over the remaining useful life of the assets.
Unabsorbed losses, capital allowances and donations may be:
- Carried forward indefinitely (except for donations which can only be carried forward for up to 5 years), provided that the shareholding composition remains substantially (i.e. 50% or more) the same on the relevant dates (the ‘shareholding test’). For utilization of unabsorbed capital allowances, there is an additional condition that the company must continue to carry on the same trade.
- Carried back for set-off against income earned in the immediate preceding year, also subject to the shareholding test being met. The amount that can be carried back is capped at SGD 100,000.
- Transferred to eligible related companies under the group relief system.
Net operating losses and assessed losses of a corporate may generally be carried forward indefinitely. However, a corporate will lose its right to carry forward an assessed loss to a subsequent year of assessment if it fails to carry on a trade during a specific year of assessment.
From April 1, 2023, a corporate's assessed losses will be limited to 80 percent of the corporate's taxable income with the balance carried forward.
Net operating losses can be carried forward 10 years.
Net operating losses (NOLs) can be carried forward with no time limit. However, the following limitations apply:
- Companies with net turnover in the previous fiscal year of less than EUR20 million can only offset NOLs up to the limit of 70 percent of the net taxable income
- Companies with net turnover in the previous fiscal year between EUR20 million and EUR60 million can only offset NOLs up to the limit of 50 percent of the net taxable income, and
- Companies with net turnover in the previous fiscal year of more than EUR60 million can only offset NOLs up to the limit of 25 percent of the net taxable income
Nevertheless, NOLs up to EUR1 million can be offset with no limit.
Tax losses may be carried forward indefinitely. Changes in the ownership of a company with tax losses carried forward may result in the tax losses being permanently or temporarily restricted.
Unused losses can be carried forward 7 years for corporate income tax purposes.
Tax losses (for Taiwan companies and Taiwan branch offices of foreign companies) may be carried forward for 10 years if such company/branch office meets certain conditions. Losses may not be carried back.
Net operating losses can be carried forward for 5 years.
Declared losses may be carried forward without limitations.
United Arab Emirates
Branches of foreign banks may carry forward losses for a limited number of years, depending on the Emirate of establishment. For other companies, loss utilization is not applicable in the UAE.
Trading losses can be carried forward indefinitely and can be carried back 1 year (or in certain limited circumstances up to 3 years). Trading losses can also be surrendered between group companies (provided, in the case of losses arising prior to April 2017, that they are utilized in the year in which they arose). However the use of carried forward trading losses is limited to the first GBP5 million of taxable profit (per group) plus 50 percent of profits in excess of GBP5 million.
Generally, net operating losses arising in tax years beginning before 2018 may offset 100 percent of taxable income and may be carried back 2 years or forward 20 years. Net operating losses arising in tax years beginning 2018 or later may offset up to 80 percent of taxable income in the year applied, with excess losses carried forward indefinitely. Special rules apply to certain net operating losses under the CARES Act.
Any assessed loss may be carried forward for a maximum of 6 years from the year of assessment in which the assessed loss was first incurred. The only exemption to this general rule is assessed losses incurred from mining operations, which may be carried forward for an indefinite period.