(in millions of euros)
Recognised in the income statement
Current income tax
Deferred income tax
Total income tax
Reconciliation with effective tax rate
Profit before tax
Income tax at Dutch tax rate for corporation tax (2020 and 2019: 25%)
Settlement of previous years
Write-down of deferred tax assets
Permanent difference: Termination fees/net asset payments
Effect of the tax rate in foreign jurisdictions (different rate)
Adjustment of losses available for set-off, Germany
Permanent difference: Capital contributions Germany
Changes in rates for deferred tax positions
Untaxed income (Fyra receipt, refund of ACM fine)
Addition of mixed costs, investment credit, etc.
Total income tax
Income tax on income and expenses recognised in the other comprehensive income
Corporation tax is calculated based on the applicable tax rates in the Netherlands, the United Kingdom and Germany, taking into account the tax rules that give rise to permanent differences between the determination of the profit for commercial purposes and the determination for tax purposes. The tax rules include the participation exemption and limits applying to deductible costs.
The effective tax rate for profit before corporation tax was -5% (2019: 9%). This low effective tax rate compared with the nominal tax rate is mainly caused by write-downs of deferred tax assets throughout the group.
Given the uncertainties regarding the tax treatment of the termination payments/net asset payments, these have been accounted for as a permanent differences. These deferrals would have been written down at the time they would have been classified as temporary differences, so the effect on the effective tax rate is zero.
For the Dutch tax entity, there is agreement with the tax authorities on the tax returns up to and including 2017. A final assessment has been received for 2017, but not yet for the subsequent years. In the financial statements for this year and previous years, tax is recognised on the basis of the tax returns submitted up to and including 2019, the underlying principles adopted in those tax returns and any adjustments to previous years.
Tax on the profit or loss for the financial year comprises the income tax that is payable or can be offset in the reporting period and deferred taxation. Income tax is recognised in the income statement, except insofar as it relates to items recognised directly in equity through other comprehensive income, in which case the tax is recognised in equity through other comprehensive income. All tax items are stated at nominal value.
The tax to be paid or offset for the financial year is the expected tax charge on taxable profit for the financial year, calculated using the tax rates prevailing on the balance sheet date, plus adjustments to tax payable for prior years.
For the purpose of income tax, nearly all the subsidiaries belonging to the Group are part of the NS tax group, with the exception of the foreign group entities.