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News 1st of July 2020 By Dries Torreele and Eva Vergote

Carry-back for corona losses becomes a reality

Carry-back for corona losses becomes a reality

How does the carry-back scheme work?

An example. A company had a taxable profit of 100,000 euros in the 31/12/2019 financial year. Forecasts indicate that the 31/12/2020 financial year will close with a tax loss of 50,000 euros. In this case, a temporary tax-exempt reserve of 50,000 euros can be recorded in the corporate income tax return for the 2019 financial year. Corporate tax will therefore be payable on a result of 50,000 euros less in the 2019 financial year. A reimbursement of the advance payments may also be possible.

Practicalities

Limitations

  • +in the event that a dividend payment, capital reduction, share buyback or any other reduction or distribution of equity has taken place in the period from 12 March 2020 up to and including the day of tax return submission for the 2021 assessment year;
  • +for companies such as investment firms and regulated property firms, as well as companies with a participation in or that make payments to companies located in tax havens;
  • +for companies that were already qualified as a firm in difficulty on 18 March 2020.

Prudence required

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Disclaimer
We base our advice on current legislation, interpretations and legal doctrine. This does not prevent the administration from being able to challenge it or to change existing interpretations.
Dries Torreele
Dries Torreele
Eva Vergote
Eva Vergote