12. Income taxes


This note contains further details on all items in the financial statements with regard to income tax, being income tax recognised in the statement of income, deferred taxes recognised in the statement of financial position, current tax positions in the statement of financial position and income tax recognised in equity.

Reconciliation of effective tax rate

(in thousands of euros)

2018

2017

Profit before tax

375,373

345,817

Income tax calculated at the domestic tax rate

93,843

25.0%

86,454

25.0%

Share of profit of associates

-24,353

-6.5%

-18,192

-5.3%

Share of profit of associates in limited partnerships that are not independently taxable

1,387

0.4%

430

0.1%

Decrease corporate income tax rate

17,332

4.7%

-4,827

-1.4%

Participation exemption on disposal of subsidiaries

-

0.0%

-1,653

-0.5%

Participation exemption on performance shares

-

0.0%

-3,085

-0.9%

Different rate for foreign subsidiaries / associates

605

0.2%

1,612

0.5%

Tax losses for which no deferred tax asset has been recognised

-

0.0%

-189

-0.1%

Change in recognised temporary differences

98

0.0%

-

0.0%

Tax results previous years

1,172

0.3%

-356

-0.1%

Other

-85

0.0%

83

0.0%

Income tax expense in income statement (effective)

89,999

24.0%

60,277

17.4%

The effective tax rate in 2018 was 24.0%, up 6.6 percentage points from 2017 (17.4%). The increase in the effective tax rate in 2018 is caused by the one-off tax expense triggered by the step-by-step reduction of the nominal income tax rate from 25% in 2019 to 20.5% in 2021 as part of the Belastingplan 2019, for which the underlying legislation was approved by the House of Representatives and the Senate in December 2018. The reduction of the nominal income tax rate triggered a recalculation of deferred tax assets and liabilities which resulted in a one-off tax charge of 17 million euros. As was the case in prior years, the application of the participation exemption to the results of associates results in a decrease of the effective tax rate.

Besides this in 2017 the effective income tax rate was below nominal due to the exempted one-off effect of the sale of Schiphol Hotel Holding B.V., the exempted result on performance shares and a decline per 1 January 2018 of the income tax rate in the United States by approximately 10%, which has a positive impact on the deferred tax liability.

There are no unused tax losses as per balance sheet date.

Income tax in the statement of income

(in thousands of euros)

2018

2017

Current income tax

Income tax current year

46,834

50,745

Adjustment for prior years

1,172

-356

Total current income tax

48,006

50,389

Deferred income tax

Origination and reversal of temporary differences

24,661

14,715

Decrease corporate income tax rate

17,332

-4,827

Total deferred income tax

41,993

9,888

Total income tax

89,999

60,277

2018 - Reconciliation of effective tax rate per tax jurisdiction

(in thousands of euros)

The Netherlands

The United States

Italy

Total

Profit before tax

368,739

6,259

376

375,373

Income tax calculated at the nominal rate

92,185

25.0%

2,159

34.5%

105

27.9%

94,448

25.2%

Results of associates

-22,966

-6.2%

-

0.0%

-

0.0%

-22,966

-6.1%

Decrease corporate income tax rate

17,332

4.7%

-

0.0%

-

0.0%

17,332

4.6%

Change in recognised temporary differences

466

0.1%

-

0.0%

-368

-97.9%

98

0.0%

Tax results from previous years

172

0.0%

-

0.0%

1,000

266.3%

1,172

0.3%

Other

41

0.0%

10

0.2%

-136

-36.2%

-85

0.0%

Income tax expense in profit or loss (effective)

87,229

23.7%

2,169

34.6%

601

160.0%

89,999

24.0%

2017 - Reconciliation of effective tax rate per tax jurisdiction

(in thousands of euros)

The Netherlands

The United States

Italy

Total

Profit before tax

337,005

8,054

758

345,817

Income tax calculated at the nominal rate

84,251

25.0%

3,697

45.9%

182

27.9%

88,130

25.5%

Results of associates

-17,762

-5.3%

-

0.0%

-

0.0%

-17,762

-5.1%

Participation exemption on disposal of subsidiaries

-1,653

-0.5%

-

0.0%

-

0.0%

-1,653

-0.5%

Participation exemption on performance shares

-3,085

-0.9%

-

0.0%

-

0.0%

-3,085

-0.9%

Tax losses for which no deferred tax asset has been recognised

-

0.0%

-

0.0%

-182

-24.0%

-182

-0.1%

Change in recognised temporary differences

-

0.0%

-4,827

-59.9%

-

0.0%

-4,827

-1.4%

Tax results from previous years

-356

-0.1%

-

0.0%

-

0.0%

-356

-0.1%

Other

11

0.0%

-

0.0%

-

0.0%

11

0.0%

Income tax expense in profit or loss (effective)

61,407

18.2%

-1,130

-14.0%

-

0.0%

60,277

17.4%

Deferred tax in the statement of financial position

The following differences in valuation for tax and reporting purposes can be distinguished:

  • Assets used for operating activities and assets under construction are measured at cost both for reporting purposes and for tax purposes. The balance sheet for tax purposes equates the cost with the market value as at 1 January 2002, whereas the balance sheet for reporting purposes equates the cost with the (lower) historical cost;
  • For tax purposes, the depreciation of both commercial buildings and operational buildings is limited to the so-called base value. Up to 1 January 2019, the base value is 50% of the WOZ value (i.e., the value under the Valuation of Immovable Property Act) of operational buildings and 100% of the WOZ value of commercial buildings;
  • Property investments are depreciated for tax purposes (with a residual value of 25%) but not for reporting purposes;
  • Borrowings in foreign currencies are measured at the closing rates on the balance sheet date for reporting purposes and at cost at the rate applicable at the time of borrowing for tax purposes;
  • The valuation of employee benefits is different for tax purposes and reporting purposes because of differences in the actuarial assumptions applied;
  • Property investments and derivative financial instruments are measured at fair value for reporting purposes and at cost for tax purposes;
  • The valuation of the contractual interest in JFKIAT is different for tax purposes (measured at cost) and reporting purposes (revalued at the time of expansion);
  • Long-term land leases received in advance are recorded as a lease liability for reporting purposes. For tax purposes, they are treated as a sale.

Deferred tax assets and liabilities are recognised in respect of all these differences.

Under IAS 12, Income Taxes, a deferred tax asset must be recognised if it is probable that sufficient taxable profit will be available against which the deductible temporary difference can be utilised. However, it is impossible to estimate the moment when the deferred tax assets relating to certain operating assets (68.3 million euros) will be realised, because the difference in the values for reporting and tax purposes will be realised only in the event of a sale (resulting in a lower profit for tax purposes and a lower income tax liability), impairment (resulting in higher costs for tax purposes and a lower income tax liability) or termination of the aviation activities (resulting in higher costs for tax purposes because compensation will only be obtained up to the carrying amount for reporting purposes). Schiphol Group is not authorised to sell the land for operating activities, forecasts of future cash flows do not suggest that impairment losses will be necessary and it is unlikely that the activities will be terminated.

Deferred tax assets and liabilities are netted if they relate to the same fiscal unity and the company at the head of this fiscal unity has a legally enforceable right to do so.

(in thousands of euros)

2018

2017

Deferred tax assets (fiscal unity)

Assets used for operating activities

141,526

172,595

Assets under construction or development

53,497

65,001

Derivative financial instruments and borrowings

14,444

19,803

Employee benefits

4,076

4,977

Investment property

-117,690

-117,877

95,853

144,499

Deferred tax assets (outside fiscal unity)

Investment property

136

314

Deferred tax liabilities (outside fiscal unity)

Contract-related assets

-14,301

-13,089

Investment property

-

-99

Derivative financial instruments and borrowings

-676

-3,463

-14,977

-16,651

Total deferred tax

81,012

128,162

Non-current (settlement is not expected)

68,285

83,274

Non-current (expected to be recovered or settled after more than 1 year)

11,181

48,351

Current (expected to be recovered or settled within 1 year)

1,546

-3,463

81,012

128,162

The movements in the deferred tax assets and deferred tax liabilities during the year were as follows:

(in thousands of euros)

Assets used for operating activities

Assets under construction or development

Investment property

Derivative financial instruments

Employee benefits

Contract-
related
assets

Total

Carrying amount as at 1 January 2017

155,791

66,486

-82,911

18,556

4,766

-20,393

142,295

Movements in 2017

Deferred tax recognised in the income statement

-4,857

-

-9,933

75

-

4,827

-9,888

Deferred tax recognised in equity

-

-

-

-2,337

176

-

-2,161

Reclassification

21,661

-1,485

-24,818

46

35

-

-4,561

Other movements

-

-

-

-

-

2,477

2,477

Total movements in the year

16,804

-1,485

-34,751

-2,216

211

7,304

-14,133

Carrying amount as at 31 December 2017

172,595

65,001

-117,662

16,340

4,977

-13,089

128,162

Movements in 2018

Deferred tax recognised in the income statement

-31,069

-11,504

108

1,281

-809

-

-41,993

Deferred tax recognised in equity

-

-

-

-6,640

-93

-

-6,733

Reclassification

-

-

-

2,787

-

-

2,787

Other movements

-

-

-

-

-

-1,212

-1,212

Total movements in the year

-31,069

-11,504

108

-2,572

-901

-1,212

-47,151

Carrying amount as at 31 December 2018

141,526

53,497

-117,554

13,768

4,076

-14,301

81,012

Income tax recognised in equity

The tax effects of the movements in equity, via comprehensive income, are as follows:

(in thousands of euros)

Before tax

Deferred tax

After tax

Exchange differences

-5,928

-

-5,928

Changes in fair value on hedge transactions

21,575

-6,640

14,934

Remeasurements of defined benefit liability

-1,845

-93

-1,938

Share in other comprehensive income of associates

-2,495

-

-2,495

Total unrealised 2018

11,306

-6,733

4,573

Exchange differences

-12,278

-

-12,278

Changes in fair value on hedge transactions

3,447

-2,337

1,110

Remeasurements of defined benefit liability

-704

176

-528

Share in other comprehensive income of associates

-6,586

-

-6,586

Total unrealised 2017

-16,121

-2,161

-18,282

Current income tax positions

(in thousands of euros)

2018

2017

Income tax receivable

Fiscal unity

11,678

16,839

Dutch subsidiaries outside the fiscal unity

435

-

Income tax in foreign jurisdictions

1,871

807

Total income tax receivable

13,983

17,646

Income tax liability

Dutch subsidiaries outside the fiscal unity

-155

-780

Total income tax liability

-155

-780

Total income tax

13,828

16,866

The income tax liability is calculated on the profit for reporting purposes, allowing for permanent differences between the profit as calculated for reporting purposes and for tax purposes. The income tax liability on fair value gains and losses which are not processed immediately in the income tax return is recognised in deferred tax assets and liabilities. Of the income tax receivable recognised in the balance sheet at 31 December 2018 with regard to the fiscal unity, an amount of 3.2 million euros relates to 2018 and 8.4 million euros to 2017. Final tax assessments have been imposed and settled for the tax years prior to 2017. The foreign income tax payable relates to local US taxes.

Differences between the income tax paid according to the cash flow statement and the income tax recognised in the statement of income concern additions to and withdrawals from deferred tax assets and liabilities, estimation differences between taxable amounts in provisional and final tax assessments, and settlements in respect of previous years.

Next:

13. Investments in associates and joint ventures