Finance

How the carry forward of tax losses works

This regime consists of charging the fiscal deficit to the company’s future profits. The latter will therefore be deducted from subsequent profits taxable with corporate tax.

Example: A company with corporate tax records a taxable profit in the amount of 10,000 euros. Over the previous financial year, it had recorded a fiscal deficit of 5,000 euros which was carried forward. Thus, thanks to the carry forward, the basis for calculating the corporate tax is equal to 5,000 euros (10,000 euros – 5,000 euros).

The cap on carry forward

A cap is foreseen at the level of carry forward. For a financial year, the carry forward may not exceed an amount equal to 1 million euros, increased by 50% of the fraction of the profit exceeding this threshold.  The portion of the deficit that cannot be deducted in application of this cap can be carried forward to subsequent years within the same limit.

The carry forward is unlimited in time

For companies with corporate tax, tax losses can be carried forward without time limit. The tax saving is only certain, however, if the company achieves sufficient tax profits in the future. In addition, no change should cause the company to lose its right to defer.

Loss of the right to carry forward tax losses

In the event of a change in the tax regime (option for the partnership regime), a change in the corporate purpose or activity, or cessation of activity, the right to carry forward tax losses is lost.

Intended for the transport of passengers and their luggage or their goods are in principle subject to the tax on company vehicles on these vehicles. However, vehicles hired for a period not exceeding one calendar month or 30 consecutive days are exempt from tax on company vehicles. Use the tax return estimator to understand the amount.

Hybrid vehicles

Hybrid vehicles can benefit from an exemption from the first component of the tax on company vehicles. The exemption does not apply to the entire tax and its scope depends on the CO2 emissions of the vehicle.

Only hybrid vehicles with gasoline or superethanol E85 which do not emit more than 100 grams of CO2 per kilometer are concerned. The exemption applies in principle for 12 quarters. If the vehicle does not emit more than 60 grams of CO2 per kilometer, the exemption is final.

Hybrid diesel vehicles are not affected by the exemption.

Vehicles combining petrol and gas

Vehicles combining gasoline with natural gas fuel or liquefied petroleum gas may benefit from an exemption from the first component of the tax on company vehicles. 

Carrying forward of corporate tax losses to corporate tax

  • Carry-back of tax losses from companies to corporate tax
  • Deferral of corporate tax losses to corporate tax
  • Carrying forward of corporate tax losses to corporate tax
  • The carry forward is the ordinary law applicable at the deficits recorded by a company tax.

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