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By Emre AKAN, Senior Associate and Luis MUÑOZ, Partner, DLA Piper in Luxembourg
Companies incurring operating losses can carry these losses forward to offset them against profits of future financial years. The use of losses carried forward is however strictly regulated by the Luxembourg income tax law.
Losses incurred by a Luxembourg fully taxable company may be carried forward for 17 years(1). The right to carry forward losses is however subject to several conditions provided by law, in particular, the company carrying the losses forward must be the same entity as the one which has suffered the losses (the so-called “identity principle”). Recent case law(2) suggests that this principle should be interpreted as referring only to the legal...
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