How does loss carry-forward work in Austria?

Austria's Verlustabzug (loss deduction) under §8 Abs 4 KStG and §18 Abs 6/7 EStG allows companies and sole traders to use tax losses from prior years to offset future profits. The rules are designed to balance support for recovering businesses with a minimum taxation principle.\n\nThe fundamental rule: indefinite carry-forward\nAustrian losses can be carried forward indefinitely — there is no expiry date on accumulated losses. A startup that loses €500,000 in its first three years can theoretically offset those losses against profits over the following 10, 20, or more years. This is more generous than the UK (which restricts some loss use) but the 75% utilisation cap limits the practical rate of recovery.\n\nThe 75% Mindestbesteuerung cap\nThe most important constraint: in any profitable year, a maximum of 75% of taxable income can be offset by brought-forward losses. The remaining 25% is always subject to tax at the applicable rate (23% KSt for companies, progressive ESt for individuals). This Mindestbesteuerung (minimum taxation) rule ensures the government always receives some revenue once a company returns to profitability.\n\n*Example:*\nA GmbH has €300,000 in accumulated losses. In 2025 it earns €100,000 taxable profit. It can offset €75,000 (75% of €100,000), leaving €25,000 taxable. KSt on €25,000 = €5,750. The remaining €225,000 of unused losses carry forward to 2026.\n\nNo carry-back\nAustria does not permit loss carry-back. A €100,000 loss in 2025 cannot be used to reclaim KSt paid on 2024 profits — unlike the UK which allows a limited 1-year carry-back, or Germany which allows a €10m carry-back. This asymmetry means Austrian businesses with volatile profits (seasonal, project-based) cannot use the UK-style cash refund mechanism.\n\nThe Mantelkauf restriction (change of ownership)\nIf a GmbH undergoes a substantial change in ownership — more than 75% of shares change hands — the Mantelkauf rules (§8 Abs 4 Z 2 KStG) may forfeit accumulated losses. This is to prevent the purchase of loss-making companies purely for their tax loss assets. The restriction applies when the change of ownership is accompanied by a significant change in the company's operational substance (assets, revenue sources, management). Purely passive ownership changes without business change do not automatically trigger loss forfeiture.\n\nIndividual taxpayer rules (§18 EStG)\nFor sole traders and individuals with business income, the EStG rules are slightly different. ESt losses from business operations can offset other income categories (rental, investment) in the same year. Remaining losses carry forward under the same 75% cap. The cap applies per income category or in aggregate depending on how the losses arose.\n\nInteraction with Mindestkörperschaftsteuer\nEven in full loss-making years, a GmbH pays the €500 annual minimum KSt. These minimum tax payments are credited against future KSt when profitability returns — they are recoverable but not interest-bearing (no credit interest accrues on the minimum tax credit balance).\n\nPractical planning for loss years\nBusinesses in loss years should:\n1. File the KSt/ESt return promptly to formally register the loss with the Finanzamt\n2. Apply for Herabsetzung of advance payments to avoid overpaying during the loss period\n3. Ensure the loss is carried forward in the correct amount (net of any non-deductible items that should not form part of the carry-forward pool)\n4. Plan for the 75% cap in recovery year budgeting — cash flow forecasts should include the KSt liability on the 25% minimum taxable amount