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22. Deferred tax

 

31 December

(thousands of €)

2022

2021

Recognized deferred tax assets and liabilities

 

 

Assets

1,363

4,032

Liabilities

20,148

-

 

 

 

Deferred tax assets unrecognized

460,102

408,892

 

 

 

Deferred taxes in the consolidated income statement

1,227

(404)

Tax benefit arising from previously unrecognized tax assets used to reduce deferred tax expense (+)

1,677

1,411

Deferred tax benefit/expenses (-) relating to temporary differences

1,899

(629)

Deferred tax expenses relating to use or derecognition of previously recognized deferred tax assets

(2,348)

(1,185)

Following table shows the movements in deferred tax assets and deferred tax liabilities:

(thousands of €)

Intangible assets other than goodwill

Retirement benefit liabilities

Tax loss carryforward

Other

Total

On 1 January 2021

 

1,440

2,907

127

4,475

Credited/charged (-) to profit or loss

 

(623)

226

(7)

(404)

Charged to other comprehensive income/loss (-)

 

(74)

 

 

(74)

Translation differences

 

33

 

2

35

On 31 December 2021

-

776

3,133

122

4,032

Impact of acquisitions of businesses

(23,265)

 

 

 

(23,265)

Credited/charged (-) to profit or loss

2,842

17

(1,797)

165

1,227

Reclassifications

275

 

(275)

 

-

Charged to other comprehensive income/loss (-)

 

(795)

 

 

(795)

Translation differences

 

22

 

(6)

16

On 31 December 2022

(20,148)

19

1,061

281

(18,785)

The consolidated tax losses, innovation income deduction, dividend received deduction and investment deduction carried forward and the deductible temporary differences on 31 December 2022 amounted in total to €1,882.5 million (2021: €1,653.7 million), €2.7 million were related to tax losses with expiry date between 2028 and 2034.

The available tax losses carried forward that can be offset against possible future taxable profits amounted to €883.6 million on 31 December 2022 (€635.6 million on 31 December 2021) and can be carried forward for an indefinite period except for an amount of €2.7 million in the United States with expiry date between 2028 and 2034. On 31 December 2022, the available tax losses carried forward in Galapagos NV (Belgium) amounted to €769.9 million (2021: €556.9 million). In addition to the latter, Galapagos NV (Belgium) also benefits from the Belgian innovation income deduction regime which led to report, on 31 December 2022, a carried forward tax deduction amounting to €346.2 million (2021: €301.3 million) that can also be offset against possible future taxable results. In addition, Galapagos NV (Belgium) also has available investment deduction carried forward of €1 million (2021: €1 million) and dividend received deduction carried forward of €18.7 million (2021: €8.2 million) that can be offset against possible future taxable profits. There is no limit in time for the innovation income deduction, the dividend received deduction and investment deduction carried forward.

With the exception of 2019, we have a history of losses. We forecast to continue incurring taxable losses in the foreseeable future as we continue to invest in clinical and preclinical development programs and discovery platforms. Consequently, no deferred tax asset was recognized as at 31 December 2022, except for one subsidiary operating on a cost plus basis, for which a deferred tax asset was recognized for €1.1 million (2021: €4.0 million, for two subsidiaries).

Net deferred tax liabilities were initially calculated based on the fair value of the intangible assets identified from the acquisition of CellPoint and AboundBio, adjusted by considering the related recognizable deferred tax assets. We refer to note 26 for more information on the purchase price allocation of the business combinations.

Development
All activities required to bring a new drug to the market. This includes preclinical and clinical development research, chemical and pharmaceutical development and regulatory filings of product candidates
Discovery
Process by which new medicines are discovered and/or designed. At Galapagos, this is the department that oversees target and drug discovery research through to nomination of preclinical candidates
Preclinical
Stage of drug research development, undertaken prior to the administration of the drug to humans. Consists of in vitro and in vivo screening, pharmacokinetics, toxicology, and chemical upscaling