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9. Income tax

(in millions of euros)

2019

2018

Recognised in the income statement

  

Current income tax

-10

-9

Deferred income tax

-11

-56

Total income tax

-21

-65

   

Reconciliation with effective tax rate

  

Profit before tax

236

181

   

Income tax at Dutch tax rate for corporation tax (2018 and 2017: 25%)

-59

-45

Settlement of previous years

-1

-

Participation exemption

5

4

Effect of the tax rate in foreign jurisdictions (different rate)

10

4

Adjustment of losses available for set-off, Germany

-3

-

Changes in rates for deferred tax positions

7

-22

Untaxed income (Fyra receipt, refund of ACM fine)

15

-4

Addition of mixed costs, investment credit, etc.

5

-2

Total income tax

-21

-65

   

Income tax on income and expenses recognised in the other comprehensive income

0

0

Corporation tax is calculated based on the applicable tax rates in the Netherlands, the United Kingdom, Ireland and Germany, taking into account the tax rules that give rise to permanent differences between the determination of the profit for commercial purposes and the determination for tax purposes. The tax rules include the participation exemption and limits applying to deductible costs.

The effective tax rate for profit before corporation tax was 9% (2018: 36%). This low effective tax rate compared with the nominal tax rate mainly reflected the imposition of the fine from the Netherlands Authority for Consumers and Markets (ACM) (which was not deductible in 2017) and an untaxed supplementary payment due to the sale of the fyra trains, as well as the deduction relating to energy investments.

The tax returns up to and including 2015 have been agreed with the Dutch Tax and Customs Administration. A final assessment has been received for 2015, but not yet for the subsequent years. In the financial statements for this year and previous years, tax is recognised on the basis of the tax returns submitted up to and including 2018, the underlying principles adopted in those tax returns and any adjustments to previous years.

The rates of corporation tax for the coming years have been reduced (see 10). The effect of the recalculation of the deferred tax amounts has led to an upward adjustment of €7 million (2018: write-down of €22 million) and has been recognised in the 2019 income statement.

Accounting policies

Tax on the profit or loss for the financial year comprises the income tax that is payable or can be offset in the reporting period and deferred taxation. Income tax is recognised in the income statement, except insofar as it relates to items recognised directly in equity through other comprehensive income, in which case the tax is recognised in equity through other comprehensive income. All tax items are stated at nominal value.

The tax to be paid or offset for the financial year is the expected tax charge on taxable profit for the financial year, calculated using the tax rates prevailing on the balance sheet date, plus adjustments to tax payable for prior years.

For the purpose of income tax, nearly all the subsidiaries belonging to the Group are part of the NS tax group, with the exception of the foreign group entities.

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