Your Irish LTD has spent its first year finding customers, developing a product and paying operating costs. The accounts now show a loss. Does that mean no tax return, a refund of everything invested, or a loss you can deduct from your own salary?
Those are different questions. This guide helps a new owner-managed company prepare for its first loss review without confusing company accounts, tax relief and cash funding. It addresses ordinary Irish trading activity, not every property, investment, regulated or cross-border case. Official guidance was checked on 24 October 2026; obtain advice on your actual transactions before making a claim.
Start with three different figures
Ask for a short reconciliation of the accounting result, the Corporation Tax computation and the cash position. A bank account falling by EUR 15,000 does not prove a EUR 15,000 tax loss. The bank movement might include equipment, loan repayments, unpaid customer invoices or money introduced by the founder.
Equally, a loss in the profit and loss account does not settle tax on every income source. Revenue distinguishes trading income from non-trading income, such as rent and investment income. A company with one loss-making activity and another income stream needs a complete computation, not a single net figure copied from the bookkeeping dashboard.
Use the following distinctions when briefing an accountant. They identify the question to answer; none is a substitute for reconciling the underlying records.
| Figure | What it answers |
|---|---|
| Accounting loss | Result under the accounting rules |
| Tax trading loss | Amount calculated under tax rules |
| Cash shortfall | Funding needed to meet payments |
| Director loan | Money owed under a funding arrangement |
Reconcile the accounts before claiming a tax loss
Capital purchases are not automatically deductible running costs. Revenue identifies capital allowances as a separate route for qualifying assets, with conditions depending on the asset and period. Some expenses, including business entertainment, are not deductible. Accounting depreciation should not simply be treated as the tax allowance.
Consider an invented simplified example: the accounts show a EUR 12,000 loss, including EUR 3,000 depreciation and EUR 2,000 non-deductible entertainment. Adding those back gives a EUR 7,000 loss before allowances. If the accountant separately establishes EUR 1,000 of eligible capital allowances, the resulting tax loss is EUR 8,000. This assumes no other adjustments; it does not prescribe an allowance rate.
The useful outcome is the bridge between EUR 12,000 and EUR 8,000, not the larger number. Keep the asset calculation and reasons for each adjustment with the working papers so next year's adviser can understand the opening position.
Check when trading actually began
Incorporation and trade commencement need not be the same date. A company formed to build a product may spend months preparing before it is ready to carry on its trade. Record the chronology of development, contracts, available services, deliveries and first sales instead of choosing whichever date creates the preferred result.
Keep pre-trading costs in a separate schedule. Their deductibility, timing and available relief require their own review; they should not all be dropped into an ordinary current-period trading-loss claim. Also distinguish costs belonging to the company from purchases made by the founder for a different activity.
Bring the factual timeline to the accountant before finalising the first return. A short initial trading period can also affect the loss-relief comparison with earlier periods. The date on a CRO certificate is not a complete tax commencement analysis.
Where might the loss be used?
Revenue describes relief against relevant trading income in the loss period or a preceding period, and a separate value-basis route for certain other income or gains. Excepted trades have different rules. Identify the category before choosing the claim.
Carry-back is bounded: the ordinary statutory comparison looks at an immediately preceding period equal in length to the loss period, with apportionment where needed. It is not permission to search all earlier profitable years.
For a genuinely new trade with no earlier taxable profits, carry-back may have nothing to relieve. Ask for a written schedule showing the chosen route, amount used and balance remaining. Do not assume the existence of a loss means a repayment is available.
A first-year loss is not a personal salary deduction
Revenue treats the company as a separate legal entity and gives it its own tax reference number. A founder's personal tax affairs remain separate. Owning every share and paying the bills personally does not turn the company's trading loss into the founder's self-employed loss.
Suppose you retain a PAYE job and lend EUR 20,000 to the LTD. That loan is funding, not automatically EUR 20,000 of deductible company expenditure or personal Income Tax relief. The company's use of the money must be analysed transaction by transaction, and the loan balance needs its own records.
Do not treat a personal bank transfer, share subscription and reimbursed business expense as interchangeable. An adviser should identify which arrangement actually occurred and the evidence for it. Separate investment reliefs, if relevant, require their own eligibility review rather than a deduction labelled 'my company's loss'.
Follow the unused balance into the next year
Revenue says qualifying unused trading losses can move forward without a fixed expiry against the same trade's future trading income, beginning with its first available profits. This does not make the balance a freely transferable credit.
Using the EUR 8,000 example, assume the same continuing trade has EUR 5,000 of qualifying income in the next period, with no competing claims or restrictions. The schedule could show EUR 5,000 used and EUR 3,000 remaining. It should reconcile to both returns, rather than carrying EUR 8,000 into every later year.
Keep each year's opening balance, additions, claims, adjustments and closing balance together. Ask about the tax position before changing ownership, transferring the trade or ceasing activity; a spreadsheet balance is not proof that all future uses remain permitted.
Other income can still leave Corporation Tax payable
A loss-making trading operation can sit alongside taxable deposit interest, rental income or a gain. Do not subtract every trading-loss euro directly from every other profit euro.
The statutory value-basis rules distinguish reducing taxable income from reducing tax by reference to a loss's tax value. The order of claims and the remaining loss balance matter. Request a computation showing those steps, rather than applying the trading rate to a single combined accounting figure.
This is a useful warning when a new company holds spare cash, assets or an investment alongside its main business. A general statement that 'we made a loss' should not be used to cancel a payment deadline without checking the whole return.
Keep the CT1 and CRO calendars running
Revenue's electronic payment-and-filing guidance requires the return and balance of tax by the 23rd of the ninth month after the accounting period ends. Preliminary tax is a separate check. A loss forecast is not permission to ignore an issued filing obligation or assume every tax head has a nil balance.
Current-period and carry-back loss claims have a two-year statutory claim window measured from the end of the loss period under the relevant provisions. That window is not the CT1 filing deadline. Revenue also warns that late returns can restrict loss relief, even where the founder expected little or no current tax.
The CRO annual return is another obligation. The first B1 is made up six months after incorporation without financial statements attached; later returns normally require accounts, subject to applicable exemptions. A trading loss does not remove the annual return. Record who prepares, approves and submits each item.
Keep evidence after the loss year closes
Revenue's general record-keeping guidance requires original supporting documents for six years and leaves responsibility with the business even where an agent holds them. For a loss used later, do not automatically destroy the evidence on the sixth anniversary: ask the adviser what must remain available to support that later claim or an open enquiry.
Prepare a usable handover, not an unexplained folder of bank screenshots. A replacement accountant should be able to trace a figure back to the invoice, ledger and submitted computation without guessing which file is final.
- Reconciled bank and payment-platform statements, sales records, purchase invoices and credit notes.
- Accounts, trial balance, tax adjustment schedule and asset or capital-allowance calculations.
- Trade-commencement chronology, pre-trading cost schedule and relevant contracts.
- Director-funding records and a separate schedule of amounts spent personally for the company.
- Submitted CT1 copies, claim calculations, Revenue correspondence and the loss roll-forward.
Review changes and cash pressure before relying on relief
Section 401 contains restrictions where ownership changes are combined with a major trade change, or ownership changes while activity is small or negligible before revival. Do not value a company purchase on an assumed usable loss balance without specialist review. Nor should a move from one trade into another be treated as obviously the same trade.
A tax loss and insolvency are different assessments. If the company may be unable to pay suppliers, wages, taxes or borrowing as due, obtain prompt accounting and legal advice. Do not count a possible future tax saving as cash available for today's bills.
Prepare a near-term cash forecast alongside the tax review. List expected receipts, committed payments, finance terms and funding that is actually available. The article explains preparation; it is not permission to incur more debt, prefer particular creditors or continue an activity regardless of solvency.
Agree the accountant's work before requesting support
StartCompany.ie offers an accountant-matching route for bookkeeping, financial statements, tax returns and compliance support. Explain that the first year is loss-making, give the actual periods and describe any director funding, other income or changes in ownership. Ask what the proposed engagement will cover.
A quote request does not automatically include a historic loss review, amended returns, a repayment claim, group relief, restructuring or insolvency advice. Obtain written scope, responsibility for deadlines and the total payable before authorising work. Do not assume incorporation or an accounting introduction guarantees a particular tax result.
Useful questions include: Who establishes the commencement date? Who prepares and retains the loss schedule? Is CT1 filing included? Will the accountant review earlier returns or only the current period? What happens if Revenue asks for supporting evidence? These answers make the engagement practical before the filing deadline approaches.
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Official information and next steps
Official sources checked on 24 October 2026, including Revenue's trading-loss page published on 16 October 2026 and its Finance Act 2025 edition of Part 12 notes. This is a general first-year preparation guide, not a complete relief claim, a solvency opinion or personalised tax advice.
- Revenue: Corporation Tax trading losses
- Revenue: Part 12 notes, Sections 396, 396A, 396B and 401
- Revenue: Corporation Tax basis of charge
- Revenue: capital allowances and deductions
- Revenue: companies and personal taxes are separate
- Revenue: Corporation Tax payment, filing and late-return restrictions
- Revenue: keeping business records
- CRO: filing an annual return, including the first return