Tax authorities meet you with wrong choice for loss relief

A temporary crisis measure applied for the years 2009 to 2011. This allowed corporate tax losses to be set off against taxable profits from the previous three years. If you opted for this measure at the time, but it did not result in a tax refund for your company, the Tax Administration is now accommodating you. Thus, your company will soon not face a restriction on loss carry-forward.

Offsetting losses
In corporate income tax, a business loss from a given year can be set off against taxable profits from the previous year (carry-back) or against profits from the next nine years (carry-forward). In the years 2009-2011 only, the carry-back period was extended to three years. Companies could opt for this temporary crisis measure. That choice automatically meant that loss carry-forward was limited to six years. The effects of this limitation will be felt for the first time from 2016.

Chosen by mistake
Relatively many companies opted for the temporarily extended loss carry-forward at the time. But what if you could not carry forward the business loss because there was no taxable profit in the relevant previous years, while your choice did limit the loss carry forward to six years? In that case, the State Secretary of Finance says that you can nevertheless simply use the nine-year period for loss carry-forward. According to him, you then ‘apparently chose by mistake’ at the time. The Inland Revenue automatically takes this into account.

If you want to maintain your original choice despite the fact that you apparently chose in error, you can ask the tax authorities to take this into account. This will come into play, for example, if an additional assessment has been or will be imposed, so that taxable profit available for the extended loss carryback will still be created.

Note!
An apparently inadvertent choice does not exist if you have received a small refund, but in hindsight prefer to use the longer nine-year loss carry-forward period.