Losses recorded in the taxable year 2020 – Deadline is extended for carrying forward losses under System A
In response to the impact of the compulsory social isolation provided for in the declaration of a State of Emergency, by Legislative Decree No. 1481 (published on May 8, 2020), the deadline for carrying forward losses under System A for loss compensation under article 50 of the Income Tax Act has been extended for losses that are recorded in the taxable year 2020.
The third-category taxpayers that register losses in the taxable year 2020 may thus be charged year after year, up to their full amount, against the third-category net income that they earn in the five (5) immediate subsequent years, from the taxable year 2021. The balance which is not compensated after this period may not be taken into account in the following years.
This provision applies to taxpayers who have chosen or choose, as the case may be, to compensate their losses under the aforementioned loss compensation system (System A).
Note that this is an exceptional measure that applies specifically in the case of those losses that are recorded in 2020. Other losses are subject to the general rule and may be carried forward for up to four (4) years.
The legislative decree enters into force on May 9, 2020.
