Dáil Éireann Debate, Tuesday - 26 May 2026
151. Deputy Richard Boyd Barrett asked the Tánaiste and Minister for Finance if he is considering introducing limits on time losses that can be carried forward against current profits for taxation purposes; and if he will make a statement on the matter. [39771/26]
View answerUnder the Irish corporation tax regime, companies can use trading losses in a variety of ways. If a company sustains trading losses in an accounting period, they can be offset against trading income for the same accounting period, and trading income for the immediately preceding accounting period. Any unused trading losses may be utilised against non-trading income, including chargeable gains, on a value basis. A trading loss may also be surrendered to group companies, subject to certain conditions and restrictions. Any unused trading losses can be carried forward, without time limit, against trading income of the same trade in future accounting periods.
The carry forward of loss relief recognises the fact that business cycles run over a longer period than just a single year and that it would be inequitable to tax profits in one year and not allow loss relief in the next. The treatment of losses in Ireland is a long-standing feature of our tax system and is a standard feature of the tax systems in OECD countries.
Changes to tax law are generally made on a prospective basis, so losses already recognised in the tax system would not typically be subject to a new restriction. Due to the manner in which loss relief operates, it could also be difficult to date pre-existing losses (e.g. for the purposes of a time limit), or to separate losses carried forward from excess capital allowances carried forward.
The Deputy may recall that, in 2018, Department of Finance officials produced a detailed technical note for the Committee on Finance, Public Expenditure and Reform, and Taoiseach, on both bank losses and corporation tax losses more generally. The technical note considered the potential implications of restricting the use of losses carried forward, or the introduction of a specific time limit or “sunset clause” on loss relief, including potential implications for consumers.
