Home Finance Carry-back of tax losses from companies to corporate tax

Carry-back of tax losses from companies to corporate tax

by Clare Louise

The carry-back deficits recorded by companies in ARE an affordable system on option. It consists in imputing the fiscal deficit on previous profits and gives rise to a tax debt on the Public Treasury.

How the tax loss carryback works

The scope of the carry-back of deficits

First of all, the carryback can only be exercised for the financial year during which the deficit is recognized. 

Then, the carry back is not possible:

  • Than on the tax benefit of the previous year. 
  • And within the limit of the lower amount between the profit for the previous financial year and an amount equal to one million euros. 
  • Where applicable, the portion of the deficit that cannot be carried back can be carried forward.

The calculation of the corporate tax debt results in the application of the carry-back of deficits

The claim on the Public Treasury is equal to the product of the deficit imputed by the corporate tax rate applicable to the year in which the profit is realized.

The option for carrying back deficits

The option for carrying back tax losses is made directly in the tax package, on table 2058 A (for companies with the actual normal regime) or no 2033 B (for companies with the actual simplified regime). Using the Tax return estimator is important there.

The use of corporate tax

The claim may be set off against corporate tax payments for the following 5 years. When the receivable could not be fully charged within this period, the company has two solutions:

  • It can use it for the payment of other tax debts (VAT for example),
  • Or it can request repayment of the debt. This is obtained by using a specific tax form (form # 2573-SD).
  • The 5-year period is determined per calendar year from the fiscal year of origin of the deficit. For example, if the original fiscal deficit is ended September 30, 2019, the refund can be requested on or after 1 set January 2025.

The benefit of carrying back tax losses

Carrying back deficits has the advantage of giving rise to a debt on the public treasury which can be reimbursed in the absence of charging on corporate tax payments in the following 5 years. The claim is therefore certain.  In addition, the carry back improves the accounts of the company since it gives rise to the recognition of a receivable in the accounts. In return, the carryback is only possible if the company has made sufficient tax profits over the previous financial year.