Tax loss carry forwards can be utilised until 2030 instead of 2025 for corporate income tax purposes

Tax & Legal Alert | Issue 609 | 21 December 2018

The time limitation for the utilization tax losses carried forward from previous periods have changed multiple times, having raised several questions in taxpayers.

According to previous rules, tax losses realized between 2004 and 2014 could be utilised for an unlimited time. As of 1 January 2015, the tax loss carry forward rules had changed and as a result, tax losses realised after 1 January 2015 can be utilized up to five years following the realisation of the respective tax loss for corporate income tax purposes.

Besides the amended regulation, a grandfathering rule sets forth that unused tax losses incurred in the tax year commencing in 2014 or before can be used up until the tax year containing 31 December 2025 regardless of the above detailed limitations.

As of 12 December 2018, the bill N.o. T/3620 concerning the modification of Act CXCV on Public Finances and other acts was approved, containing important changes related to the tax loss carry forward rules (among others). The approved bill modifies the above indicated deadline of using up the tax losses incurred in 2014 or before to the tax year containing the date 31 December 2030. This extension can be considered as especially beneficial for taxpayers who incurred tax losses in said period, but may not have been able to fully utilise such losses within the currently effective time frame up to 2025.

The President of the Republic signed the bill on 19 December 2018. The changes concerning tax loss carry forwards will enter into force on the day following their publication.

 

Contact us

Dr. Tamás Lőcsei

Dr. Tamás Lőcsei

Country Managing Partner, PwC Hungary

László Deák

László Deák

Partner, PwC Hungary

Follow us