Appendix D: International loss treatment

• Change of ownership considered as more than a 50 per cent change in voting power, dividend or capital rights.
• Ownership tracing concessions apply to widely held companies.
• Carve out for companies with a change of ownership that have maintained the same business activity.

Unincorporated businesses.
Loss carry forward permitted for unincorporated businesses.

• Losses must be utilised at first opportunity.
• Losses may offset non-business income, subject to various restrictions.

• Losses can only be carried forward against 75 per cent of current annual income.
• Losses will not be transferable if there is a change in the economic identity of the company combined with a modification of the organisational structure, unless the intentions of such modifications are to preserve employment.
• Losses will be forfeited in the case of a merger, if the assets through which the losses were originated are not included in the arrangement.

Unincorporated businesses.
Loss carry forward permitted for unincorporated businesses and may be deducted against non-business income.

• A change of ownership takes place if there is more than a 50 per cent change in share capital or voting power.
• Continuation of 'similar' business activities is generally interpreted as 'of the same general nature or character', and considers factors such as the location of the business carried on before and after the ownership change, nature of the business, nature of the income-producing assets, name of the business, existence of period/s of dormancy, extent to which the original business activities now constitute the income-producing activities of the successor company.
• No explicit rules to allow the transfer of losses within a consolidated group.

Unincorporated businesses.
Loss carry forward permitted for unincorporated businesses and may generally be deducted against other forms of taxable income.

• A change of ownership takes place if there is a more than 50 per cent change in share capital or voting power.
• Change of ownership rules do not apply to financial enterprises, including banks.
• Restrictions on carry forward of losses do not apply for group internal restructurings.

Unincorporated businesses.
Carry-forward of losses permitted for unincorporated businesses and may be deducted against personal income.

Loss carry back amount capped at €1 million.

Net operating losses that exceed this €1 million cap may offset taxable income in a subsequent year, but will be limited to 60 per cent of that year's taxable income.

• Only 60 per cent of profits in excess of €1million may be offset against losses carried forward.
• Losses will be forfeited if there is a “thorough” change in the business or activity of the loss company, regardless of its ownership.

Unincorporated businesses.

Extends to sole traders and partnerships.

• Only €1million plus 60 per cent of the current year profits in excess of this amount will be offset against tax loss carry forward.
• Losses will be forfeited in cases where the loss-incurring entity owns less than 50 per cent of shares within five years of the change of ownership and also if predominantly new business assets are injected into such an entity.
• A partial forfeiture of losses will result from a 25-50 per cent of shares in a corporation are acquired.
• Exceptions exist for other (non-tax) considerations, including allowances for companies that restructured in order to rescue a loss-making company.

Unincorporated businesses.
Loss carry forward permitted for unincorporated businesses and may be deducted from other forms of taxable income, subject to special restrictions.

Unincorporated businesses.

Loss carry back permitted for unincorporated businesses.

• Change of ownership requires that the same persons that controlled trade in the 1 year before the change in ownership continue to hold a minimum 75 per cent share in trade within the two years after the transfer of ownership.
• Restrictions on loss carry forward do not apply for group internal restructurings.
• Activity test requires continuation in the nature of the original company's trade including the type of goods, services or facilities provided and the customers, outlets or markets.

Unincorporated businesses.
Loss carry forward permitted for unincorporated businesses, however may only offset profits from the same trade.

• Change of ownership takes place if there is more than a 50 per cent change in the ownership of the loss entity. Ownership is calculated by multiplying the acquired corporation's stock by the long-term exempt bond rate.
• An equity test³⁸ and vitality test³⁹ must be passed to be able to use pre-existing losses in the case of a merger.
• All ordinary losses incurred after the first three years of business activity are only permitted to offset 80 per cent of subsequent taxable income.
• Loss carry forward is forfeited if a change in the main business activity of the company occurs within two years following or preceding the change of ownership.

Unincorporated businesses.
Loss carry forward permitted for unincorporated businesses, however ring-fencing rules deny offsetting against non-business income.

• A change of ownership occurs when 50 per cent of the voting shares of a company changes.
• Change of ownership rules may not apply in circumstances of inheritance, donation, internal reorganisation, merger and split off that are not considered alienations for tax purposes.
• Where a merger is carried out, only the merging company can carry forward the losses it has at that moment, and only for purposes of using them against profits derived from the same trade that originated the losses.
• After a change of ownership and activity, a loss carry-forward can only o
  ffset profits from the same type of activity that generated the losses if the sum of the receipts derived during the last three years is less than the accumulated losses of the company.

Unincorporated businesses.
Loss carry-forward permitted for unincorporated businesses, however ring-fencing rules deny their offsetting against non-business income.

Loss carry back amount capped at €1 million.

• Carry forward is denied if more than 30 per cent of original shareholders have disposed of their shares. Broadly, this rule does not apply if the new shareholders already held one third of the shares.
• Exceptions permitted in cases where a lack of tax avoidance motive is demonstrated.
• Additional restrictions are applicable in the case of holding and group financing companies.

• A change of ownership occurs if more than 50 per cent of voting rights changes in one year. Ownership tracing concessions may apply.
• Losses can be carried forward after an internal group restructuring if continuity and commonality requirements are met.
• Loss carry-forward permitted for unincorporated businesses and may be deducted against other forms of taxable income.

In addition, a temporary 2 year loss carry back has been introduced for losses from 2008 and 2009. Loss carry back for these years is capped at NOK 20 million per annum.

• Pre-existing losses will not be recognised in mergers if one of the merging firms already possesses losses, and the merging arrangement is therefore likely to be underpinned by tax-avoidance motives.
• Special rules apply to the petroleum sector: carry forward of losses with interest; tax value of losses refundable on cessation of activity; tax value of losses due to exploration refundable annually.

Unincorporated businesses.
Loss carry-forward permitted for unincorporated businesses.

• As of August 2011, temporary changes were enacted for loss carry-forward utilisation.
• For the years 2011, 2012 and 2012, a company with a turnover (that is, sales) between €20-60 million is only allowed to offset up to 75 per cent of its taxable income with net operating losses being carried forward
• A company with a turnover in excess of €60 million may only offset 50 per cent of its taxable income.
• The original 15 year carry-forward period was extended to 18 years.
• For newly established companies, the carry-forward period commences as from the first tax year in which profits are made.
• Restrictions exist mainly in cases of change of control of dormant companies.
• Restrictions on carry-forward of losses do not apply for group internal restructurings.

Unincorporated businesses.
Unincorporated businesses may carry-forward losses against other sources of income under Personal Income Tax regulations.

• A change of ownership occurs if there is a change of controlling interest of more than 50 per cent.
• After an acquisition of control of a company, the loss carry-forward is deductable only up to 200 per cent of the acquisition price and it is not possible to use the loss carry-forward of the acquired company through group contributions during the first five years after the change of ownership.
• Restrictions on carry-forward of losses do not apply for group internal restructurings.

Unincorporated businesses.
Loss carry-forward permitted for unincorporated businesses.

• No restrictions following change of ownership with the exception of special cases, such as the transfer of shares in a non-active company.
• Financial restructurings may overcome change of ownership restrictions.

Unincorporated businesses.
Loss carry-forward permitted for unincorporated businesses.

If a trade is permanently discontinued certain losses may be carried back against profits of the same trade for the previous 3 years.

Carry back only allowed if the organisation was carrying on the same trade at some point in the preceding 12 months.

Unincorporated businesses

. Loss carry back is permitted for unincorporated businesses.

• There is a change in ownership if more than 50 per cent of a company's ordinary share capital changes hands.
• Losses may only be carried forward against profits of the same trade.
• Internal reorganisations may overcome change of ownership restrictions.

Unincorporated businesses.
Loss carry-forward permitted for unincorporated businesses.

Unincorporated businesses.

Loss carry back permitted for unincorporated businesses.

• Change in ownership occurs if, as a result of changes in the stock of ownership by '5 per cent shareholders' or other reorganisations, the percentage of the corporation's stock owned by those 5 per cent shareholders increases by more than 50 percentage points over the lowest percentage of stock owned by those shareholders at any time during the prior three-year testing period.
• Some losses can be utilised if some of the old corporation's historic business is continued.

Unincorporated businesses.
Loss carry-forward permitted for unincorporated businesses.