8. Taxes
Income taxes relating to continuing operations
The following table summarizes the income tax recognized in profit or loss for the years ended 31 December 2014 and 2013.
|
Year ended 31 December, |
|
(thousands of €) |
2014 |
2013 |
Current tax |
(2,396) |
|
Deferred tax |
293 |
(676) |
Total Taxes |
(2,103) |
(676) |
Current tax recorded in 2014 for an amount of €2.4 million relates to a tax provision for subsidiaries operating under cost plus transfer pricing arrangements, triggered by a change in estimate in 2014. Deferred tax recorded in 2014 for an amount of €0.3 million relates to one subsidiary operating on a cost plus basis for the group.
Deferred tax charges representing €0.7 million for the year ended 31 December 2013 related to the reversal of a deferred tax asset on tax losses carried forward in Croatia. Due to a revised business strategy of the subsidiary in 2013 (transition towards service company), the company would no longer be in a taxable position or even be profitable in the foreseeable future, which explained the reversal of the deferred tax asset.
Tax liabilities
The below tables illustrate the tax liabilities related captions in the balance sheet for the year ended 31 December 2014 and 2013.
|
Year ended 31 December, |
|
(thousands of €) |
2014 |
2013 |
Current tax payable |
2,582 |
50 |
Total tax liabilities |
2,582 |
50 |
The tax liabilities amounting to €2.6 million on 31 December 2014 are primarily related to the recognition of tax liabilities for one of the subsidiaries operating on a cost plus basis for the group for €2.1 million due to a change in estimates. In addition, taxes on gain on the sale of the service division are included in the tax liabilities for €0.4 million. The income tax expense in connection with the sale of the service division was only €0.4 million, since the gain is considered as a capital gain under Belgian tax law, which is subject to a tax rate of less than 1%.
Taxes recognized in profit or loss |
||
|
|
|
|
Year ended 31 December, |
|
(thousands of €) |
2014 |
2013 |
Continuing operations |
|
|
Current tax |
(2,396) |
|
Deferred tax |
293 |
(676) |
Total continuing operations |
(2,103) |
(676) |
|
|
|
Discontinued operations |
|
|
Current tax |
(437) |
(165) |
Deferred tax |
203 |
3,956 |
Total discontinued operations |
(234) |
3,791 |
|
|
|
Total taxes |
(2,337) |
3,115 |
Corporation tax is calculated at 34% (2013: 34%)—which is the tax rate applied in Belgium—of the estimated assessable profit for the year. The applied tax rate for other territorial jurisdictions is the tax rate that is applicable in these respective territorial jurisdictions on the estimated taxable result of the accounting year.
|
Year ended 31 December, |
|
(thousands of €) |
2014 |
2013 |
Loss before tax from continuing operations |
(35,201) |
(16,135) |
Income before tax from discontinued operations |
70,748 |
4,941 |
Income / loss (–) before tax |
35,548 |
(11,194) |
Income tax debit / credit (–), calculated using the Belgian statutory tax rate (34%) on the accounting income / loss (–) before tax (theoretical) |
12,083 |
(3,805) |
Tax expenses in income statement (effective) from continuing operations |
2,103 |
676 |
Tax expenses / income (–) in income statement (effective) from discontinued operations |
234 |
(3,791) |
Tax expenses / income (–) in income statement (effective) |
2,337 |
(3,115) |
Difference in tax expenses / income (–) to explain |
(9,746) |
690 |
|
|
|
Effect of tax rates in other jurisdictions |
6 |
(22) |
Effect of non taxable revenues |
(41,249) |
(6,817) |
Effect of consolidation entry without tax impact |
12,786 |
(388) |
Effect of non tax deductible expenses |
1,459 |
1,188 |
Effect of recognition of previously non recognized deferred tax assets |
(293) |
(3,595) |
Effect of change in tax rates |
(165) |
(245) |
Effect of tax losses (utilized) reversed |
(1,549) |
(499) |
Effect from under or over provisions in prior periods |
2,144 |
(89) |
Effect of non recognition of deferred tax assets |
17,688 |
10,821 |
Effect of R&D tax credit claims |
(572) |
(340) |
Effect of derecognition of previously recognized deferred tax assets |
|
676 |
Total Explanations |
(9,746) |
690 |
The main difference between the theoretical tax and the effective tax for the year 2014 is primarly explained by low capital gain tax (less than 1%) under Belgian tax law, on the gain on sale of the service division, and by the unrecognized deferred tax assets on tax losses carried forward for which the Group conservatively assesses that it is not likely that these will be realized in the foreseeable future.