The tax loss incurred during the year is carried forward and set off against future profits for a period of five years. In addition the loss can be set off against the profit of another group company provided both companies are tax resident of Cyprus. Since tax year 2015, a subsidiary company which is tax resident in another EU member state can surrender its taxable losses to another group member company tax resident in Cyprus, provided the subsidiary has exhausted all the means of surrendering or carrying forward the losses in the member state of residence of the subsidiary intermediary holding Company.
Two or more companies can be defined as group when the one Company holds at least 75% (directly or indirectly) of the voting shares of the other company or the voting of share of both companies are held at least by 75% (directly or indirectly) by a third Company.
Tax losses from a permanent establishment abroad can be set off with profits of the Cyprus Companies. However, Subsequent profits of the permanent establishment abroad are taxable up to the amount of losses allowed.
