Home   Companies and charities   Corporation Tax for companies  

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.

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: 19 October 2023 Print this page

Back to homepage Back to top