Losses incurred are usually borne internationally and in Germany in the year they arise through existing equity , capital increase or loss compensation by the shareholders of a company . In commercial and tax law, however, there are certain conditions that allow these losses to be carried over to the next financial year . This transfer of a loss is called a loss carryforward. It is a loss that was not offset against other equity items in previous years or in the current year and is therefore presented as a separate - negative - equity item. It has the effect of reducing equity and is an indication of a bad economic situation for the balance sheet reader and analyst , in which a company could not process accumulated losses but push them on.
This loss carryforward under commercial law is not identical to that under tax law. This is due to the different regulatory objectives in commercial and tax law. In commercial law, the loss carryforward is a balance sheet item that represents the extrapolation of a loss that is not offset by equity items . Commercial law knows no barriers to the amount of loss carried forward; In the case of corporations, it may even exceed their equity and is then to be capitalized as “deficit not covered by equity” ( (3) HGB). In tax law, on the other hand, it is used to calculate the assessment base and relates to all types of income, including losses without accounting profit determination such as B. Income from renting and leasing or employment. The offsetting of tax loss carryforwards is subject to various deduction restrictions in order to prevent tax arrangements and secure tax revenue.
The loss carryforward HGB . The classification scheme contained therein specifies that positive equity elements ( subscribed capital , reserves , profit carried forward , annual surplus or retained earnings ) must be netted with negative elements (loss carried forward, annual deficit or retained earnings ) . What remains is the actually available equity. If an annual deficit is not offset by other equity items, it remains as a loss carryforward. In the bookkeeping , this loss carryforward is kept as a passive stock account with a negative starting balance ("minus-passive account"); Increases due to additional losses are booked on the right side and decreases on the left. Technically, the loss carried forward is the accumulated loss of the previous year.commercial law results from (3) A IV
A loss carryforward under commercial law is limited to corporations because the law stipulates that losses must be offset against capital shares in partnerships (Paragraph 2, Clauses 3-7 HGB). In the case of corporations, the loss carryforward includes that part of the loss of a company that is carried over to the accounts of the next few years as a loss after the reserves have been consumed and any profit carried forward.
Jahresüberschuss/Jahresfehlbetrag + Gewinnvortrag aus dem Vorjahr oder - Verlustvortrag aus dem Vorjahr + Entnahmen aus der Kapitalrücklage + Entnahmen aus Gewinnrücklagen - Einstellungen in Gewinnrücklagen = Bilanzgewinn/Bilanzverlust
For example, if a net loss for the year is shown and the other items show "zero", the net loss is the amount of the net loss for the year. This will be carried forward in the next year as a loss carryforward. If the loss carryforward under commercial law is greater than that under tax law, deferred tax assets are to be formed; if it is smaller, deferred tax liabilities are to be formed. Deferred tax assets represent fictitious tax refund claims to the tax office and vice versa.
Usually the loss carryforward is associated with tax law. In German tax law there is no legal definition for the concept of loss. The BFH understands this to mean “negative income” from business activities. If tax law allows losses to be offset against profits, this will reduce profit-related income taxes. For certain losses, there are therefore numerous offsetting bans or restrictions in income, corporation and trade tax law . The consequence of this is that such losses are "lost" in full or in part under tax law, ie they cannot be offset against subsequent positive income (= profits) for tax purposes. Under certain conditions, however, tax law grants taxpayers the option of offsetting losses incurred with future taxable profits ("use of losses"). This use of losses is regulated very differently in income, corporation and trade tax law.
From a tax point of view, a loss carryforward is intended to offset these losses with profits expected in the future. In a future assessment period , losses that were generated in earlier assessment periods but had no tax impact reduce the taxes that would actually be attributable to the profit of this assessment period. Rules on minimum taxation have a restrictive effect . The loss carryforward is an instrument for realizing the performance principle. In the event of losses, section taxation initially imposes a tax burden over and above the performance resulting from the total term , which is offset again when the loss carryforward is asserted.
There are also arrangements in which loss carryforwards from companies in a group can be offset against the profits of other group companies. The loss carryforward can be the main motive in a company takeover: namely, that the profits of an acquiring company may be offset against the losses carried forward by the acquired subsidiary (see shell purchase ).
There are restrictive regulations in many countries for the tax effectiveness of such offsetting; as a rule, only offsetting with domestic losses is permitted. According to the Marks & Spencer decision of the European Court of Justice , however, a general ban is in part contrary to European law.
Tax loss carryforwards in Germany
A distinction is made between loss use in income, corporation and trade tax law.
Income tax law
The income tax law differs in ITA between loss carry (for back support in the immediately preceding period of assessment), and loss of speech (for presentation in future assessment periods). A loss is carried back if current losses are offset against profits from the immediately preceding period; the loss carryforward, however, relates to future fiscal years. Loss carryforwards may only be offset by the loss-making company (Section , EStG, , (1) KStG). This use of losses is subject to numerous material and time restrictions. According to EStG, the loss compensation of a limited partner of a limited partnership is limited to the amount of his capital contribution .
Uncompensated losses in accordance with § 10d Income Tax Act in the following assessment periods up to a total amount of income without limitation of one million euros, in addition, up to 60% of the one million euro in excess of the total income in priority to special expenses , extraordinary expenses are deducted and other deductible amounts ( Loss carryforward). In the case of jointly assessed spouses, the amount of one million euros is replaced by an amount of two million euros. The loss carryforward is only permitted insofar as the losses could not be offset with other positive income by carrying back losses in previous assessment periods.
Losses from tax deferral models , which the taxpayer joined after November 10, 2005 or for which external sales began after November 10, 2005, may not be offset with income from commercial operations or income from other types of income ( EStG). Since offsetting against later profits is not excluded, a separate loss assessment is necessary.
Incidentally, any remaining loss carryforwards are lost after death. They cannot be invoked by the heirs.
A frequent application in income tax law are losses that arise in secondary training (there are no losses in initial training because expenses there are special expenses that are incurred outside of income), e.g. B. a degree after vocational training or a master’s degree: the student has expenses for the degree, but no taxable income. Its expenses are anticipated business expenses . A loss arises, which is determined by applying for a loss assessment and can then be deducted from the income by the presentation after graduation.
Corporation and trade tax
In the case of corporation tax, losses can also be carried forward or carried back in accordance with Section 10d of the Income Tax Act; the maximum amounts also apply here; Special provisions in the event of a change of shareholders (Section 8c KStG) or municipal loss-making businesses (Section 8 (7-9) KStG) must also be observed. In the case of trade tax, however, only a loss carryforward and no loss carryforward is possible; the offsetting of losses is also limited to 1 million euros according toGewStG and beyond that only possible in the amount of 60% of the profits.
Tax loss carryforwards in Austria
Tax loss carryforwards in Switzerland
Losses from the seven fiscal years preceding the tax period can be deducted if they could not be taken into account when calculating the taxable income of these years. In the case of losses from several previous periods, those that originate from the earliest financial years must first be offset (Art. 211 Federal Law on Direct Federal Taxes (DBG)).
International accounting standards
In IAS 12.34 et seq. Is controlled, due to which fact constellations, a utility may arise from loss carry. In May 2014, the IFRS committee decided that according to IAS 12.34 ff., Deferred tax assets on loss carryforwards may only be recognized if there are taxable temporary differences that will be reversed in the future and against which the loss carryforwards will be offset in the relevant period could. It does not matter whether tax gains or losses are expected for the relevant period. According to IAS 12.36, when recognizing deferred taxes, it must be checked whether the company can use the loss carryforward within the legally prescribed time and whether it is of a one-off nature. In addition, in accordance with IAS 12.35, evidence must be provided that the loss carryforward is due to causes that will no longer occur in the future (e.g. start-up losses).
- Reinhard Heyd, Michael Beyer, Daniel Zorn : Accounting according to HGB in diagrams. 2013, p. 106 ( books.google.de ).
- Robert Wienken: Deferred taxes. 2003, p. 120.
- This item shows an entry in the indebtedness of
- Rainer Buchholz: Basic features of the annual financial statements according to HGB and IFRS. 2013, p. 120 ( books.google.de ).
- Information from the Federal Chamber of Tax Advisors on the disclosure of equity in commercial partnerships in commercial law, Professional Law Manual Part II, Section 3.2.2.
- Rudolf Schindelmann: The compensation of commercial losses in German tax law. 1968, p. 152.
- BFH, judgment of October 17, 1990, BStBl II. 1991, 136.
- Jan Becker, Rüdiger Loitz , Volker Stein: Tax-optimal loss utilization. 2009, p. 77 ( books.google.de ).
- Jan Becker, Rüdiger Loitz, Volker Stein: Tax-optimal loss utilization. 2009, p. 21 ( books.google.de ).
- The loss carryforward ( Memento from May 2, 2014 in the Internet Archive ), Austrian Chamber of Commerce