Taxes Consolidation Act 1997 section 381B

Restriction of loss relief - passive trades

Section 381B restricts sideways loss relief available to individuals who carry on a trade or profession in a non-active (passive) capacity, capping the relief at €31,750 per year of assessment.

• An individual carries on a trade in a non-active capacity if they do not spend an average of at least 10 hours a week personally engaged in its activities, carried on commercially with a reasonable expectation of profit.
• Where the non-active test is met, the amount of loss that can be relieved under section 381 is capped at €31,750 per year, regardless of how many passive trades the individual carries on.
• The cap is reduced proportionately where the basis period for the year of assessment is shorter than 12 months.
• Any excess loss that cannot be relieved due to the cap is carried forward for offset against profits of the same trade in future years under section 382.