Carry back
Carry back is a tax technique whereby losses from the current year are offset against profits from previous years in order to obtain a tax refund.
In Dutch tax law, the carry-back mechanism permits losses arising in the current financial year to be carried back to prior years. This enables a company that incurs a loss in a given year to offset such loss against previously taxed profits, resulting in a refund of corporate income tax already paid.
Carry back is relevant in that it provides businesses with liquidity during periods of underperformance and contributes to an equitable tax treatment across multiple years. In practice, it is applied primarily in the context of corporate income tax, and the request is generally submitted through the tax return or by means of a separate application for an ex officio reduction.
“The company has applied carry-back to the loss for the current year in order to obtain a refund of corporation tax for prior years.”
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