Module 221 min2172 wordsFree — no account
When carry-forward stops: change of control, change of business and the vitality test
The module’s worked examples, then cases to attempt before revealing their solution · 6 sections · 609 words · 7 min
Worked example
A catering company sold and repurposed
In March 2026 an investor buys 70% of a catering SRL with past losses of 200,000 euros. In 2027 the company shuts its kitchen and turns to letting property. Majority ownership has passed and the business has changed within the next two years: both conditions are met, and ordinary carry-forward no longer applies, unless the vitality test offers a way out.
Worked example
An autumn sale
The majority of an SRL with a calendar financial year is sold on 15 October 2026, and in 2027 the business changes. At 31 December 2025 the losses stood at 120,000 euros; 2026 closes with a further loss of 30,000 euros. Because the sale falls after the first half of the year, the restriction covers the full 150,000 euros.
Worked example
A company that passes on revenue but fails on staff
Reference year 2025: revenue 300,000 euros, staff costs 60,000 euros. In 2023 and 2024 revenue was 500,000 and 700,000 euros, averaging 600,000, threshold 240,000: passed. Staff costs were 180,000 and 220,000 euros, averaging 200,000, threshold 80,000: not passed. The test fails and the restriction applies.
Worked example
The ceiling with and without a valuation
At the reference date a company has book net equity of 220,000 euros and an appraised economic value of 400,000 euros. In the previous twenty-four months the shareholders paid in 50,000 euros. With the valuation the ceiling is 400,000 − 2 × 50,000 = 300,000 euros; without it, the ceiling is 220,000 − 50,000 = 170,000 euros.
Practical case
Buying the dormant company
In May 2026 a group buys 80% of a printing SRL with losses of 300,000 euros at 31 December 2025 and, in 2027, turns it into an IT services company. In 2025 the SRL had core revenue of 180,000 euros and staff costs of 90,000 euros; in 2023 and 2024 revenue was 400,000 and 500,000 euros, staff costs 200,000 and 250,000 euros. Appraised net equity at 31 December 2025 is 260,000 euros and the shareholders paid in 40,000 euros in the previous twenty-four months. How much of the losses can the company carry forward?
Hint: Check the two conditions in paragraph 3, then the vitality test on both figures and, if it is passed, the paragraph 3-ter ceiling using the valuation.
Show the solution
Majority transferred and business changed in the following year: paragraph 3 applies. Vitality test: average revenue 450,000, threshold 180,000; 2025 revenue is 180,000, equal to the threshold rather than above it, so the test fails. The paragraph 3 restriction applies in full, and the paragraph 3-ter ceiling, which only concerns companies that pass the test, does not come into play.
Answer: No losses can be carried forward under the ordinary rule
Practical case
The same purchase with a livelier company
Take the previous case and change two figures: in 2025 the SRL had core revenue of 200,000 euros and staff costs of 95,000 euros. Everything else is unchanged: losses of 300,000 euros, the same 2023 and 2024 figures, appraised net equity of 260,000 euros, payments of 40,000 euros in the last twenty-four months, and a sworn valuation report available. How much of the losses can still be carried forward?
Hint: Redo the vitality test on revenue and staff costs, then compute the valuation-based ceiling by deducting twice the payments.
Show the solution
Revenue 200,000 against a threshold of 450,000 × 40% = 180,000: passed. Staff costs 95,000 against a threshold of 225,000 × 40% = 90,000: passed. The test is passed, so the paragraph 3-ter ceiling applies: 260,000 − 2 × 40,000 = 180,000 euros. Of the 300,000 euros of losses, 180,000 can be carried forward; the remaining 120,000 euros can no longer be used.
Answer: 180,000 euros of losses carried forward out of 300,000
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