Loss Carryforward for Self-Employed in Germany 2026: Use § 10d EStG to Cut Future Tax

A bad business year isn't the end — tax-wise, it can actually become an asset. If you're self-employed or a freelancer in Germany and your business runs at a loss, you can carry that loss forward into future years under § 10d EStG (loss carryforward) and use it to reduce future income tax. In 2026 this becomes especially relevant thanks to the Wachstumschancengesetz, higher carryback thresholds and tightened minimum-taxation rules.

What loss carryforward is and why it matters

Loss carryforward means: any loss from your self-employed activity that you can't offset against other income in the same year is carried over into the next tax year. It reduces your taxable profit there — and lowers your income tax. The carryforward has no time limit: you can use the loss until it is exhausted.

For freelancers and traders preparing the EÜR (income surplus calculation), this is one of the most powerful planning tools — particularly in the first business years or after major investments.

Carryforward vs. carryback

You have two options under § 10d EStG:

• Loss carryback (§ 10d para. 1): the loss is carried back into the two preceding years; tax already paid is refunded. Cap: €1 m (single) / €2 m (joint).
• Loss carryforward (§ 10d para. 2): the loss is moved into future years. No time limit.

Carryback is the default — it brings cash back fast. But if you expect future profits to push you into a higher tax bracket, you can waive the carryback and carry everything forward. The choice is made in the Anlage Sonstiges of your tax return.

How loss carryforward works inside the EÜR

Step by step:

1. Prepare your EÜR. If business expenses exceed income, you have a loss.
2. Enter the loss in Anlage S (freelancers) or Anlage G (traders).
3. The tax office first offsets it against your other positive income for the year (e.g. salary from employment). Whatever is left becomes a carryback or carryforward.
4. The carried-forward loss is fixed in a separate Verlustfeststellungsbescheid (loss assessment notice). Keep this document carefully — it is the legal basis for every following tax year.

Minimum taxation: the 70 % rule above €1 m

As long as your carried-forward loss is below €1 m, you can deduct it in full. Above that threshold, the German minimum-taxation rule kicks in:

• Up to €1 m → 100 % offset
• Above → only 70 % of the excess profit can be offset (for tax years 2024–2027 under the Wachstumschancengesetz; otherwise 60 %)

Most freelancers will never hit this — anyone carrying million-euro losses should already be working with a tax advisor.

The loss assessment notice — why it's critical

The Verlustfeststellungsbescheid is a separate notice you receive every year a vortragsfähiger Verlust remains. It is independent of your normal tax assessment and is the only document the tax office is bound by in later years.

Practical tip: always file your tax return on time, even if you made a loss. If you don't declare the loss, you forfeit it.

Carryback or carryforward — which to pick?

Rules of thumb:

• Carryback when the prior years had high profits and you need cash.
• Carryforward when next year will be strong and your marginal tax rate will rise.
• Partial carryback (allowed since 2022) — you can specify exactly how much of the loss to carry back; the rest stays in the carryforward.

One catch: losses are personal. If a self-employed person dies, the carryforward dies with them — it cannot be inherited.

Loss carryforward in a GmbH — how is it different?

In a GmbH the same principles apply, but the calculation runs through the balance sheet and the corporate income tax assessment. For corporation-specific rules see our GmbH loss carryforward guide. Closely related is the investment deduction (Investitionsabzugsbetrag), which lets you deliberately create losses ahead of investments to reduce future tax.

Conclusion

Loss carryforward is one of the strongest tax tools available to self-employed people in Germany. It means a bad year is never wasted — it pays you back in future tax savings. The key is to declare the loss correctly in the EÜR, secure the loss assessment notice and decide strategically between carryback and carryforward.

With Norman's tax tools for the self-employed you generate your EÜR, Anlage S and VAT return automatically — including the correct loss reporting for ELSTER.