A trading loss incurred in an accounting period may be offset against trading profits which have arisen in the same period. The loss may be setback against the trading income of the previous period. It may be brought forward to the extent that the trade continues against the future profits of the same trade.

Where the loss cannot be used to offset trading income, it may be used as a tax credit to reduce corporation tax on non-trading passive income and chargeable gains in the current period and in the previous period.

Tax Losses in Groups

Losses may be transferred to group entities by way of group relief. One group company may surrender its losses to another member of the same group provided each within the scope of Irish corporation tax.

A group for the purpose of the surrender of losses for corporation tax purposes comprise corporate’s resident in an EEA or EU country with whom Ireland has a double taxation agreement in a 75% group relationship. They may be a parent or subsidiary or sub-subsidiaries. They may be sister companies within a 75% group. The relationship may be traced through companies resident in the EU or another state with whom Ireland has a double taxation treaty. 

The profits and gains of an Irish branch are subject to Irish corporation tax at the above rates. There is no withholding tax on the repatriation of profits to the head office.

As under standard OECD double taxation treaties, the profits of the foreign branch of an Irish resident company receive credit for foreign tax paid in relation to the branch. The excess foreign tax credit may be put against Irish tax on other branch profits in the relevant year. The unused credit may be carried forward and offset against corporation tax on foreign branch profits in later periods.