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Corporation Tax (CT)

  1. Overview
  2. Basis of charge
  3. Company residency rules
  4. Close companies
  5. Capital allowances and deductions
  6. Dividends
  7. Trading losses

Trading losses

If a company sustains trading losses in an accounting period, they can be offset as a means of a relief from tax against:

  • other trading income for the same accounting period
  • or
  • trading income for the immediately preceding accounting period.

This relief is calculated on a euro for euro basis. This means that a loss of one euro can be offset against a profit of one euro.

Value basis relief

Any unused trading losses may be offset against non-trading income, including chargeable gains, on a value basis. The tax value of trading losses is limited to the 12.5% rate of Corporation Tax.

The following example explains how a trading loss can be offset on a value basis against a non-trading income.

  • Example

    A company has a trading loss of €100,000 and a chargeable gain of €100,000. The tax due on the chargeable gain is €33,000.

    The company can offset the loss at 12.5% against the tax due on the chargeable gain.

    Trading loss offset on a value basis
    Tax due on chargeable gain    €33,000
    Offset trading loss (on value basis)  €100,000 x 12.5% €12,500
    Tax due  €33,000 - €12,500  €20,500

Losses carried forward

The unused trading losses can be carried forward, without time limit, against trading income of the same trade in future accounting periods. A loss must be claimed against the first available profits of the same trade.

The above provisions do not apply to companies carrying out an excepted trade. Those companies can offset a trading loss against:

  • their total profits for the same period in which the loss arose
  • and
  • their total profits of the immediately preceding accounting period.

Published: 05 November 2024 Print this page

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