Note 6: Income tax

Pre-tax income from continuing operations amounted to a profit of €1,448 million (2015: €1,476 million). The net tax charges related to continuing operations are included in the statement of income as follows:

The total deferred tax charge, including discontinued operations was €120 million (2015: €109 million). The total tax charge, including discontinued operations, was €393 million (2015: €407 million).

Effective tax rate reconciliation

The effective income tax rate based on the statement of income is 27.2 percent.

The impact of non-refundable withholding tax on the tax rate is dependent on our relative share in the profit of subsidiaries in countries that levy withholding tax on dividends and on the timing of the remittance of such dividends. Based on the Dutch tax system there is a limited credit for such taxes.

Deferred tax assets and liabilities

From the total amount of recognized net deferred tax assets, €321 million (2015: €496 million) is related to entities that have suffered a loss in either 2016 or 2015 and where utilization is dependent on future taxable profit in excess of the charges arising from the reversal of existing taxable temporary differences. For these entities, net deferred tax assets were recognized based on management’s long-term projections and tax planning strategies.

The usage of the tax loss carryforwards recognized in the balance sheet will affect the cash tax rate in coming years.

A deferred tax liability is recognized for taxable temporary differences related to investments in subsidiaries, branches and associates and interests in joint ventures, to the extent that it is probable that these will reverse in the foreseeable future. The expected net tax impact of the remaining differences for which no deferred tax liabilities have been recognized is €30 million.

The income tax recognized in equity in 2016 includes the positive impact of the re-recognition of certain post-retirement benefits related deferred tax assets.