10. 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 2015 and 2014.
|
Year ended 31 December |
|
(thousands of €) |
2015 |
2014 |
Current tax |
(215) |
(2,396) |
Deferred tax |
1,433 |
293 |
Total income taxes |
1,218 |
(2,103) |
Current tax representing €0.2 million for the year ended 31 December 2015 was related to taxes for subsidiaries operating on cost plus basis.
Current tax recorded in 2014 for an amount of €2.4 million related to a tax provision for subsidiaries operating under cost plus transfer pricing arrangements, triggered by a tax audit.
Deferred tax income of €1.4 million for the year ended 31 December 2015 and €0.3 million for the year ended 31 December 2014 both related to subsidiaries working on a cost plus basis.
Tax liabilities
The below table illustrates the tax liabilities related captions in the balance sheet as at 31 December 2015 and 2014.
|
Year ended 31 December |
|
(thousands of €) |
2015 |
2014 |
Current tax payable |
2,583 |
2,582 |
Total tax liabilities |
2,583 |
2,582 |
The tax liabilities amounting to €2.6 million on 31 December 2015 and 2014 are primarily related to the recognition of tax liabilities for one of the subsidiaries operating on a cost plus basis for €2.1 million, as a consequence of a tax audit. In addition, taxes on gain on the sale of the service division in 2014 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%.
Corporation tax is calculated at 34% (2014: 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.
The tax of the year can be reconciled to the accounting result as follows:
|
Year ended 31 December |
|
(thousands of €) |
2015 |
2014 |
Loss before tax from continuing operations |
(119,627) |
(35,201) |
Income before tax from discontinued operations |
|
70,748 |
Income / loss (–) before tax |
(119,627) |
35,548 |
Income tax debit / credit (–), calculated using the Belgian statutory tax rate (34%) on the accounting income / loss (–) before tax (theoretical) |
(40,661) |
12,083 |
Tax expenses / income (–) in income statement (effective) from continuing operations |
(1,218) |
2,103 |
Tax expenses in income statement (effective) from discontinued operations |
– |
234 |
Tax expenses / income (–) in income statement (effective) |
(1,218) |
2,337 |
Difference in tax expenses / income to explain |
39,444 |
(9,746) |
|
|
|
Effect of tax rates in other jurisdictions |
328 |
6 |
Effect of non taxable revenues |
(5,934) |
(41,249) |
Effect of consolidation entry without tax impact |
57 |
12,786 |
Effect of non tax deductible expenses |
1,966 |
1,459 |
Effect of recognition of previously non recognized deferred tax assets |
(1,307) |
(293) |
Effect of change in tax rates |
|
(165) |
Effect of tax losses (utilized) reversed |
(597) |
(1,549) |
Effect from under or over provisions in prior periods |
58 |
2,144 |
Effect of non recognition of deferred tax assets |
45,195 |
17,688 |
Effect of R&D tax credit claims |
(322) |
(572) |
Effect of derecognition of previously recognized deferred tax assets |
|
|
Total explanations |
39,444 |
(9,746) |
The main difference between the theoretical tax and the effective tax for the year 2015 is primarily explained by the unrecognized deferred tax assets on tax losses carried forward for which we conservatively assess that it is not likely that these will be realized in the foreseeable future.
The main difference between the theoretical tax and the effective tax for the year 2014 is primarily explained by low capital gain tax (less than 1%) under Belgian tax law, on the gain on sale of the service division (see line non-taxable revenues and effect of consolidation entries), and by the unrecognized deferred tax assets on tax losses carried forward for which we conservatively assess that it is not likely that these will be realized in the foreseeable future.
Non-taxable revenues for the years ended 31 December 2014 and 2015 are related to non-taxable subsidies and tax credits.