(2023)
What if income from services is negative?
Negative income or losses from services can be offset against profits from similar income in the same year. At the same time, it must be clear that you could also achieve a surplus with the other services. Otherwise, the losses from the services will not be recognised, but you do not have to pay tax on the income either.
If the income from services is negative, it can be carried back to the previous year and offset against the profits of the same type achieved there. You can also carry the losses forward to the following year and offset them against the surpluses you are likely to achieve then.
By carrying back or forward losses, you reduce your taxable income in the relevant year.
Note: In the past, you had a double option with loss carryback: you could waive it entirely and save the loss for the following year. Or you could carry back the loss with a specific amount. "At the taxpayer's request, the loss carryback is to be waived in whole or in part. The application must specify the amount of the loss carryback" (§ 10d para. 1 sentences 5 and 6 EStG).
Since 2022, this option has been restricted: you can only waive the application of the loss carryback in favour of the loss carryforward entirely, but no longer carry back a partial amount. "At the taxpayer's request, the application of the loss carryback is to be waived entirely" (§ 10d para. 1 sentence 6 EStG-new). This means: Under the previous legal situation, the amount of the loss carryback could be limited on request so that losses were not used up by the basic allowance. This option is now no longer available for loss carryback over two years.
