A new legal notice, published on the 22nd February 2023, extends by a year the temporary measure promulgated by the Group Deductions (Income Tax) Rules. These Rules, first published in 2022, allow entities with excess capital allowances, as a result of losses suffered during the COVID-19 pandemic, to be surrendered to other group entities for utilization by the latter. With the extension, claimant entities can deduct the surrendered amounts against the income of basis years 2021 and 2022 (formerly 2021 only). Such extension was earlier announced by the Minister for Finance and Employment in his last Budget Speech.

All conditions tied with this temporary measure have been retained including the cap of Eur1,000,000 in maximum deductions that can be surrendered and claimed, per group of companies for both basis years 2021 and 2022 (i.e. years of assessment 2022 and 2023). The eligible balances for surrender remained those unabsorbed capital allowances, including balancing allowances, arising in basis years 2020 and 2021.

This amendment further clarifies that the surrendered amounts shall be equal to the claimed amounts in each year of assessment and shall be claimed in the same year of assessment of the surrender.

The Group Deductions Guidelines which were issued by the Commissioner for Revenue last year were updated to reflect the changes to the Rules. 

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