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What is a donation carryforward?

Donations and, if applicable, membership fees to promote tax-privileged purposes can be deducted as special expenses up to 20 percent of the total income. If your donation exceeds this maximum amount, the excess amount is carried forward to the next year and considered within the maximum amount. This is known as a donation carryforward. The donation carryforward is unlimited in time and continues until the entire donation amount has been offset.

The tax office issues you with an assessment notice each year for the amount not yet taken into account.

What is a donation carryforward?


Loss carryforward and loss carryback: How do they work?

Losses or negative income can be claimed for tax purposes to reduce the tax burden. In principle, losses are first offset against positive income in the same year. If losses remain, there are two options: loss carryback and loss carryforward.

(1) Loss carryback to the previous year

Negative income that cannot be fully offset in the year the loss occurs can be carried back to the previous year. The following limits apply:

  • Until 2023: Loss carryback up to 1,000,000 Euro for single persons and up to 2,000,000 Euro for joint assessment.
  • For 2020 and 2021: Due to the Corona crisis, the loss carryback was increased to a maximum of 10,000,000 Euro or 20,000,000 Euro for joint assessment.
  • From 2022: The loss carryback can now be applied over two years permanently. The amount limits of 10,000,000 Euro or 20,000,000 Euro apply until the end of 2023. From 2024, the old limits (1,000,000 Euro or 2,000,000 Euro) apply again.

Important: The loss carryback must be applied for in the tax return. Since 2022, it is no longer possible to carry back only part of the loss. It is only possible to waive the carryback entirely to use the loss in subsequent years.

(2) Loss carryforward to the following year

Losses that could not be offset after the loss carryback or in the year the loss occurred are carried forward to the following year.

  • Up to 1,000,000 Euro (for single persons) or 2,000,000 Euro (for joint assessment) the losses are deducted from the total income.
  • Exceeding amounts: For higher loss amounts, only 60% of the remaining total income can be deducted.
Current developments:
  • 2024 to 2027: The limit for the exceeding loss carryforward will be increased to 70% to improve tax relief.
  • From 2028: The old regulation applies again, allowing 60% of the total income to be used for the loss deduction.
Corona-related adjustments:

Due to the economic impact of the Corona crisis, the following relief measures were introduced for 2020 and 2021:

  • Increase in loss carryback: The maximum loss carryback was increased to 10,000,000 Euro or 20,000,000 Euro (for joint assessment).
  • Permanent extension of the loss carryback to 2 years from 2022.
Conclusion:

Loss carryback allows losses to be used to reduce taxes from the previous year. Loss carryforward enables losses to be claimed in future years. The current regulation offers greater flexibility and higher limits to account for losses in economically difficult times, such as the Corona crisis.

Loss carryforward and loss carryback: How do they work?


How do loss deduction, loss carryback and loss carryforward work?

Losses or negative income can be offset against positive income for tax purposes – first in the same year (loss offset), then in the previous year (loss carryback) or in subsequent years (loss carryforward). The basis is § 10d EStG.

1. Loss carryback to the previous year

Losses that cannot be fully offset in the year they arise may be carried back to the immediately preceding year. The carryback is limited to the following amounts:

  • 1.000.000 Euro for individual assessment
  • 2.000.000 Euro for joint assessment
Example:

An entrepreneur incurs a loss of 1.500.000 Euro in 2025. In the previous year 2024, he made a profit of 800.000 Euro. The loss is carried back up to the maximum limit of 1.000.000 Euro. Of this, 800.000 Euro is used – the remaining 700.000 Euro can be carried forward.

Note: The special Corona regulations with increased loss carryback (up to 10 or 20 million Euro) only applied for 2020 and 2021.

2. Loss carryforward to the following year

Losses not offset can be carried forward to subsequent years. The following rules apply:

  • Up to 1.000.000 Euro (or 2.000.000 Euro) fully creditable
  • Above this: offset only at 70% of total income (from 2024 to 2027; previously 60%)

From 2028, the 60% limit will apply again.

Example:

If 700.000 Euro remain after the loss carryback, they will be offset against the profit in 2026. If the profit in 2026 is 1.000.000 Euro, 700.000 Euro can be credited – subject to the 70% limit.

3. Special features for certain types of income

Some losses may only be offset within their type of income. These include:

  • Private sales transactions (§ 23 EStG)
  • Other income (§ 22 No. 3 EStG)
  • Commercial animal breeding/farming (§ 15 para. 4 sentences 1–2 EStG)
  • Futures transactions (§ 15 para. 4 sentences 3–5 EStG)
  • Tax deferral models (§ 15b EStG)
Example:

A loss from a property sale under § 23 EStG can only be offset against gains from other private sales transactions – not against salary income.

4. Special case of capital losses
  • Losses from capital income cannot be offset against other types of income.
  • Losses from share sales can only be offset against gains from other share sales – not against interest or dividends.
  • No loss carryback possible, only loss carryforward.
Conclusion

Losses can be used for tax purposes – by carrying back to the previous year or carrying forward to subsequent years. Pay attention to special rules for capital income and private sales. In case of doubt, tax advice is recommended.

How do loss deduction, loss carryback and loss carryforward work?

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Is there a loss carryforward according to the assessment notice as of 31.12.2024?

A loss carryforward is determined by the tax office in a loss determination notice if negative income from previous years has not been fully offset. This remaining loss can be offset against positive income in the tax year 2025.

Losses from certain types of income (e.g. capital gains) can only be offset against profits of the same type.

Loss carryforward from capital assets with final withholding tax (sect. 20 para. 6 sentence 5 of the Income Tax Act (EStG))

Enter the loss carryforward from income subject to withholding tax (e.g. interest, dividends) as determined by the tax office. These losses can only be offset against future positive income from capital assets.

Example: You incurred 2024 losses from interest amounting to 500 Euro. This amount will be offset as a loss carryforward 2025 against your interest or dividends.

Loss carryforward from the sale of shares (sect. 20 para. 6 sentence 4 of the Income Tax Act (EStG))

Enter the loss carryforward from share sales here. Such losses may only be offset against future gains from share sales – not against other capital gains. However, the restriction on loss offsetting is disputed.

Example: In 2024, you made a loss of 1.200 Euro from selling shares. This amount may only be offset against future gains from share sales.

Loss carryforward from forward transactions (sect. 20 para. 6 sentence 5 Income Tax Act (EStG))

Enter the assessed losses from forward transactions (e.g. options, futures, certificates) here. These can be offset against future profits from forward transactions. Unused amounts are carried forward.

Example: You made a loss of 8.000 Euro trading options. This year, you make a profit of 10.000 Euro from futures. A maximum of 8.000 Euro can be offset.

Loss carryforward due to irrecoverability of receivables (section 20 (6) EStG)

Enter losses due to the complete or partial default of capital claims or the loss of assets here.

Example: You privately lent 5.000 Euro to an acquaintance, which they were unable to repay 2025. This loss can be offset against capital income (e.g. interest).

Loss carryforward from benefits (sect. 22 no. 3 of the Income Tax Act (EStG))

Enter the loss from other income as defined in section 22 no. 3 EStG (e.g. occasional temporary work, rental of movable items). These losses can only be offset against positive income of the same type.

Example: You rented out your private tent for a festival once. The costs for transport and cleaning were higher than your income. The loss was recorded and can be offset against profits from similar one-off services in 2024.

Loss carryforward from tax deferral models (sect. 15b of the Income Tax Act (EStG))

Enter losses from tax deferral models here. These may only be offset against future positive income from the same model and are subject to strict legal restrictions.

Example: You participated in a fund model that is considered a tax deferral model and incurred a loss of 10.000 Euro. This may only be offset against future gains from this specific model.

Loss carryforward from all other non-listed income

Enter all other assessed loss carryforwards that are not assigned to the income types mentioned above. These will be offset by the tax office against future positive income of the corresponding type.

Example: You had losses of 2.000 Euro from a part-time self-employment in 2024 that do not fall into any of the special areas. This loss will be offset against corresponding profits from the same activity in 2025.

Loss carryforward from private sales transactions (sect. 23 para. 3 of the Income Tax Act (EStG))

Enter the loss carryforward from private sales transactions here, e.g. property, securities outside the capital gains tax, or cryptocurrencies. The offset is only possible with future gains from private sales transactions.

Example: In 2024, you sold cryptocurrencies at a loss of 4,000 Euro. In 2025, you sell more coins with a profit of 6,000 Euro. The loss carryforward reduces the taxable gains to 2,000 Euro.

I request for Partner A to waive a loss carryback according to sect. 10d of the Income Tax Act (EStG) in the year 2024 and 2023.

If you incurred losses in 2025, the tax office will generally automatically carry them back to the previous year (2024) – provided there is positive income in that year with which the loss can be offset. Otherwise, a loss assessment notice will be issued and the loss carried forward to the following year.

If you do not wish to take advantage of the loss carryback – for example, because it offers no or only minimal tax benefits – you can apply here to completely waive the loss carryback under section 10d EStG. The loss will then be fully carried forward to future years.

A partial limitation of the carryback has not been possible since 2023. There is only the option of a full carryback or waiver.

Was any negative income from a third country determined as of 31.12.2024?

Select "yes" if you received a notice from the tax office by 31.12.2025 confirming losses from a non-EU country (third country).

Only with such a notice can these losses be considered in the tax return for 2025.

Background:

  • Third country losses are subject to special deduction restrictions (§ 2a EStG).
  • Offsetting is only permitted with official confirmation from the tax office.
  • This applies to, for example, losses from investments or rentals in non-EU/EEA countries.