Germany: Loss recognized on settling option can be carried back to offset related income earned in earlier year

German Federal Fiscal Court decision

Can be carried back to offset related income earned in earlier year

The German Federal Fiscal Court held (file ref. XIII R 27/21) that a taxpayer could carry back losses recognized on settling an option to offset income earned with respect to the same option in an earlier year, and thereby reduce the associated tax liability in the earlier year.

KPMG observation

Investors may want to consider amending their tax returns in light of this decision, which deviates from the approach that has been taken by the tax authority and generally followed by banks.

Read a November 2022 report prepared by the KPMG member firm in Germany 


The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.