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Corporation Tax Trading Losses

Posted on: Saturday, April 05, 2014

When revising for professional tax exams, it's essential to clarify the specific rules that apply to these highly examinable areas.


What do we mean by Group Relief?

Group Relief may be claimed where one member of the group is entitled to surrender its trading losses to another member of the same group.


What are the conditions for Group Relief to be claimed?

To be a member of a group of companies, the following conditions need to be satisfied:

1. Both companies must be resident in the state or in one of the member states of the European Economic Area with which Ireland has a treaty and one company must be a 75% subsidiary of the other company or both companies must be 75% subsidiaries of a third company which is resident in the state or in one of the member states of the European Economic Area with which Ireland has a treaty.

Loss relief, however, is restricted to losses incurred in a trade in respect of which the company is within the charge to Corporation Tax in the state.


2. The parent company must be beneficially entitled to not less than 75% of the profits for distribution to the equity holders.


3. The parent company must be beneficially entitled to not less than 75% of the assets available for distribution to the equity holders on a winding up.


What should I be particularly aware of?

1. Existing trading losses will NOT be available for group relief.
2. Future losses should be available for loss relief provided the above conditions are satisfied.