Pre-tax income from continued operations amounted to a loss of €1,498 million (2011: profit €833 million). The net tax charges related to continuing operations are included in the statement of income as follows:
|
Classification of current and deferred tax result | ||||
|
|
|
| ||
|
In € millions |
2011 |
2012 | ||
|
|
|
| ||
|
Current tax expense for |
|
| ||
|
The year |
(229) |
(257) | ||
|
Adjustments for prior years |
9 |
31 | ||
|
|
(220) |
(226) | ||
|
|
|
| ||
|
Deferred tax expense for |
|
| ||
|
Origination and reversal of temporary differences and tax losses |
(21) |
51 | ||
|
Changes in tax rates |
7 |
(2) | ||
|
Tax losses recognized or unrecognized |
1 |
5 | ||
|
|
(13) |
54 | ||
|
Total |
(233) |
(172) | ||
The total tax charge, including discontinued operations was €155 million (2011: €183 million).
Effective tax rate reconciliation
The effective income tax rate based on the consolidated statement of income is 11 percent negative. It is negative because a tax charge was recorded despite a loss incurred for the period, mainly attributable to the largely non-tax-deductible impairment charges.
Excluding the impairment loss on intangibles of €2,106 million, pre-tax income totaled a profit of €608 million. The tax expense excluding the impairment of intangibles amounted to €193 million, thus resulting in an effective consolidated tax rate of 31.7 percent. The effective tax rate in 2012 was affected by several adjustments to prior years. In addition, the geographical mix of taxable income affected the tax charge. The effective tax rate in 2011 was affected by several adjustments to prior years and by tax-exempt gains, the main one being a release of an antitrust provision. In addition, the geographical mix of taxable income affected the tax burden.
The impact of non-refundable withholding tax is dependent on the relative share of our profit from countries that levy withholding tax on dividends and on the timing of the remittance of such dividends. This relative share is expected to increase in the coming years. Based on the Dutch tax system there is only a limited credit for such taxes. The impact for 2012 is exceptionally high because of an anticipated extraordinary dividend.
|
Effective consolidated tax rate | ||||||
|
|
|
| ||||
|
in % |
2011 |
2012 | ||||
| ||||||
|
Corporate tax rate in the Netherlands |
25.0 |
25.0 | ||||
|
Effect of different tax rates in certain countries |
3.9 |
3.8 | ||||
|
Tax exempt income/non-deductible expenses |
0.2 |
3.2 | ||||
|
Non-taxable income from investment in associates and joint ventures |
(0.7) |
(0.7) | ||||
|
Changes in enacted tax rates (reductions in tax rate) |
(0.9) |
0.4 | ||||
|
Recognition of previously unrecognized tax losses |
(0.1) |
(0.8) | ||||
|
Current year losses for which no deferred tax asset was recognized |
0.3 |
1.5 | ||||
|
Current year profits for which no deferred tax asset was recognized |
0.0 |
(0.2) | ||||
|
Under/(over)-provided in prior years |
(1.1) |
(5.1) | ||||
|
Non-refundable withholding taxes |
1.4 |
4.7 | ||||
|
Other |
– |
(0.1) | ||||
|
Effective consolidated tax rate1 |
28.0 |
31.7 | ||||
Deferred tax assets and liabilities
In the deferred tax asset for other provisions (€326 million), an amount of €189 million (2011: €213 million) is related to interest expense carried forward. From the total amount of recognized net deferred tax assets, €527 million (2011: €513 million) is related to entities that have suffered a loss in either 2012 or 2011 in the tax jurisdiction to which a deferred tax asset relates, and where utilization is dependent on future taxable profit in excess of the profit arising from the reversal of existing taxable temporary differences. Deferred tax assets not recognized on the balance sheet are partly related to capital losses which cannot be offset against operational taxable profits.
|
Income tax recognized directly in equity | ||||
|
|
|
| ||
|
In € millions |
2011 |
2012 | ||
|
|
|
| ||
|
Current tax for |
|
| ||
|
Currency exchange differences on intercompany loans of a permanent nature |
(3) |
4 | ||
|
|
(3) |
4 | ||
|
|
|
| ||
|
Deferred tax for |
|
| ||
|
Share-based compensation |
(3) |
– | ||
|
Hedge accounting |
17 |
(1) | ||
|
Currency exchange differences on intercompany loans of a permanent nature |
(5) |
2 | ||
|
|
9 |
1 | ||
|
Total |
6 |
5 | ||
|
Unrecognized deferred tax assets | ||||
|
|
|
| ||
|
In € millions |
2011 |
2012 | ||
|
Capital losses |
268 |
267 | ||
|
Tax losses |
23 |
21 | ||
|
Deductible temporary differences |
124 |
123 | ||
|
Total |
415 |
411 | ||
The loss carryforward recognized in the balance sheet and its usage in the coming years has a decreasing impact on the cash tax rate in coming years.
|
Loss carryforwards recognized in the balance sheet | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||
|
In € millions |
2013 |
2014 |
2015 |
2016 |
2017 |
Later |
Unlimited |
Total | ||||||||
|
Total loss carryforwards |
821 |
20 |
31 |
50 |
66 |
326 |
2,150 |
3,464 | ||||||||
|
Loss carryforwards not recognized in deferred tax assets |
(751) |
(7) |
(13) |
(26) |
(38) |
(7) |
(16) |
(858) | ||||||||
|
Total |
70 |
13 |
18 |
24 |
28 |
319 |
2,134 |
2,606 | ||||||||
|
Movement in deferred tax in 2011 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| ||||||||
|
In € millions |
Net balance January 1, 2011 |
Changes in ex- |
Acqui- |
Recog- |
Recog- |
Net balance December 31, 2011 |
Assets |
Liabilities | ||||||||
|
Intangible assets |
(713) |
(5) |
(19) |
36 |
– |
(701) |
61 |
762 | ||||||||
|
Property, plant and equipment |
(96) |
1 |
(4) |
5 |
– |
(94) |
62 |
156 | ||||||||
|
Inventories |
28 |
– |
– |
1 |
– |
29 |
33 |
4 | ||||||||
|
Trade and other receivables |
2 |
1 |
2 |
9 |
– |
14 |
31 |
17 | ||||||||
|
Share-based payments |
11 |
– |
– |
4 |
(3) |
12 |
12 |
– | ||||||||
|
Provisions for post-retirement benefits |
134 |
(1) |
– |
(77) |
– |
56 |
247 |
191 | ||||||||
|
Restructuring provisions |
14 |
– |
– |
1 |
– |
15 |
15 |
– | ||||||||
|
Other provisions |
331 |
8 |
– |
(26) |
– |
313 |
345 |
32 | ||||||||
|
Other items |
150 |
1 |
– |
15 |
12 |
178 |
194 |
16 | ||||||||
|
Net operating loss carryforwards |
752 |
27 |
5 |
55 |
– |
839 |
839 |
– | ||||||||
|
Deferred tax assets not recognized |
(408) |
(14) |
– |
7 |
– |
(415) |
(415) |
– | ||||||||
|
Tax assets/liabilities |
205 |
18 |
(16) |
30 |
9 |
246 |
1,424 |
1,178 | ||||||||
|
Set-off of tax |
– |
– |
– |
– |
– |
– |
(611) |
(611) | ||||||||
|
Net deferred taxes |
205 |
18 |
(16) |
30 |
9 |
246 |
813 |
567 | ||||||||
|
Movement in deferred tax in 2012 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
In € millions |
Net balance January 1, 2012 |
Changes in ex- |
Acqui- |
Recog- |
Recog- |
Held for Sale |
Net balance December 31, 2012 |
Assets |
Liabilities | |||||||||
|
Intangible assets |
(701) |
12 |
(6) |
65 |
– |
83 |
(547) |
71 |
618 | |||||||||
|
Property, plant and equipment |
(94) |
– |
10 |
28 |
– |
9 |
(47) |
84 |
131 | |||||||||
|
Inventories |
29 |
– |
– |
– |
– |
(5) |
24 |
27 |
3 | |||||||||
|
Trade and other receivables |
14 |
– |
– |
9 |
– |
(2) |
21 |
26 |
5 | |||||||||
|
Share-based payments |
12 |
– |
– |
3 |
– |
– |
15 |
15 |
– | |||||||||
|
Provisions for post-retirement benefits |
56 |
(7) |
– |
(133) |
– |
(11) |
(95) |
223 |
318 | |||||||||
|
Restructuring provisions |
15 |
– |
– |
14 |
– |
(2) |
27 |
28 |
1 | |||||||||
|
Other provisions |
313 |
(4) |
– |
(25) |
– |
(7) |
277 |
320 |
43 | |||||||||
|
Other items |
178 |
(2) |
– |
9 |
– |
(4) |
181 |
214 |
33 | |||||||||
|
Net operating loss carryforwards |
839 |
(1) |
(1) |
105 |
1 |
– |
943 |
943 |
– | |||||||||
|
Deferred tax assets not recognized |
(415) |
9 |
1 |
(6) |
– |
– |
(411) |
(411) |
– | |||||||||
|
Tax assets/liabilities |
246 |
7 |
4 |
69 |
1 |
61 |
388 |
1,540 |
1,152 | |||||||||
|
Set-off of tax |
– |
– |
– |
– |
– |
– |
– |
(710) |
(710) | |||||||||
|
Net deferred taxes |
246 |
7 |
4 |
69 |
1 |
61 |
388 |
830 |
442 | |||||||||
