Russia's loss rules are restrictive — losses carry forward indefinitely, but only 50% of a year's profit can be offset, and only with documentation. Whether your losses are actually usable, documented and reducing your tax is the question.
They're properly documented to the FTS standard — then they carry forward indefinitely to offset future profit.
50% of any year's taxable profit can be offset by carried-forward losses — the rest is taxed, so the losses release over time, not at once.
Russia's rules on carrying forward tax losses are more restrictive than in many other jurisdictions — and became significantly more so from 2017. For foreign-owned Russian companies that have gone through a loss-making period (common during restructuring, market entry or the post-2022 adjustment), understanding how losses can be used against future profits is essential for tax planning.
Under Article 283 of the Russian Tax Code, tax losses incurred from 2017 onwards can be carried forward indefinitely — there is no time limit on the carry-forward period. However, the amount of loss that can be offset against profit in any one tax period is limited:
From 2017 to 2024: maximum 50% of the taxable profit for the period
From 2025 onwards: maximum 50% of taxable profit — the same 50% restriction continues
Pre-2017 losses retain the old rules: 10-year carry-forward, no percentage restriction on utilisation.
Russian LLC has carried-forward losses of RUB 200m and taxable profit of RUB 100m in 2025. Maximum loss offset: 50% × RUB 100m = RUB 50m. CIT payable: (RUB 100m − RUB 50m) × 25% = RUB 12.5m. Remaining carry-forward: RUB 200m − RUB 50m = RUB 150m — available for offset in future years. Without the 50% restriction, the full RUB 100m profit could be sheltered, giving CIT of zero.
Losses can only be carried forward if they are correctly documented. The FTS requires:
The loss must be reflected in the annual CIT return (налоговая декларация по налогу на прибыль) for the year in which it arose
The supporting documentation — primary documents, accounting records — must be retained for the entire period of utilisation plus the standard 4-year retention period after full utilisation
The loss calculation must be correct — losses from non-operating activities (внереализационные расходы) can be carried forward, but some specific loss categories have restrictions
Russia's tax loss carry-forward has one of the strictest documentation requirements globally: primary documents supporting the loss must be retained for the entire carry-forward period plus 4 years after utilisation. For a company that incurred losses in 2019 and carries them forward to 2030 before full utilisation, documents from 2019 must be kept until 2034. Many companies dispose of old records prematurely — losing the right to carry forward losses they have already reflected in returns.
Losses from transactions with securities and financial instruments are ring-fenced — they can only be offset against gains from similar transactions, not against general taxable profit. This is particularly relevant for Russian subsidiaries that hold investments or engage in treasury activities.
Pick your situation — we'll tell you where you stand:
Where losses arise from transactions with related parties at non-arm's-length prices, the FTS may challenge the loss as a TP adjustment. TP documentation should cover transactions that give rise to significant losses.
Unlike some jurisdictions, Russia does not restrict loss carry-forward on a change of ownership. Losses in a Russian LLC are not forfeited when the LLC is acquired — they transfer with the entity. This can be a significant factor in M&A pricing where the target has substantial accumulated losses.
Russia introduced a consolidated tax group (КГН) regime in 2012, but this was effectively abolished from 2023 — new consolidated groups cannot be formed, and existing ones expired. Russian subsidiaries of the same foreign group cannot share losses between them — each Russian LLC is a standalone taxpayer. A loss-making Russian subsidiary cannot offset losses against profits of a profitable Russian sister company.
Where the company has discretion over the timing of income recognition (advance payments, long-term contracts), accelerating income recognition into a year where loss carry-forward is available can increase the effective use of the 50% offset.
Where losses are expected to be generated in future years, deferring deductible expenses (where permitted by Russian accounting rules) to those years reduces the loss that needs to be carried forward — the 50% restriction makes large accumulated losses less valuable than they appear.
For groups considering restructuring their Russian operations, the treatment of accumulated losses is a key variable. Losses in a company that is liquidated are not transferable — they are simply extinguished. Losses in a company that is merged into another Russian entity may be transferable under the reorganisation rules, subject to conditions.
Confirm all tax losses are correctly reflected in annual CIT returns — amended returns may be needed if losses were understated
Maintain primary document archives for all years with losses — do not dispose of records prematurely
They carry forward indefinitely, but only 50% of a given year's taxable profit can be offset by them — so losses release over several years, not all at once. And the claim requires documentation to the FTS standard, without which it can be disallowed.
No — the 50% annual cap means at least half of each year's profit is taxed regardless of accumulated losses. Planning the offset within that limit is what uses the losses as efficiently as the rules allow.
Only if it's documented — the supporting records for the losses have to meet the FTS standard, or the claim is disallowed on review. Building that documentation is what protects the offset before an audit tests it.
This explains Russia's restrictive loss rules — indefinite carry-forward, but only 50% of profit can be offset in any year, and only with documentation. Your question is whether your losses are actually usable, properly documented, and being applied to reduce your current tax.
Sitting on carried-forward losses? Worth confirming they're documented and being used before an audit tests them.
Practical support for international business in Russia.