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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
  • 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.

Any unused trading losses may be offset against non-trading income, including chargeable gains, on a value basis.

The unused trading losses can be carried forward against trading income in succeeding accounting periods. If carried forward those losses have to be utilised at the first available opportunity.

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 company can offset the loss at 12.5% against the tax due on the chargeable gain. The tax due on the chargeable gain is €33,000. The relief on the loss is €12,500 (€100,000 x 12.5%), which leaves a balance of €20,500 tax due.

The above mentioned 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: 30 May 2017 Print this page

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