9. Income tax

(in millions of euros)

2018

2017*

Included in the income statement

  

Current taxes

-9

-148

Deferred taxes

-56

143

Total income tax

-65

-5

   

Reconciliation with effective tax rate

  

Profit before tax

181

52

   

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

-45

-13

Non-deductible costs

-4

-10

Other permanent differences

2

9

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

4

20

Reversal devaluation deferred tax asset

-

67

Changes rates deferred tax positions

-22

-

Settlement previous years

-

-78

Total income tax

-65

-5

   

Income tax on income and expenses recognised directly in equity

-

-

  • * adjusted for change in accounting principle regarding the United Kingdom railway pension schemes, as
    explained in Section 1

Corporate income 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 produce 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 to deductible costs.

The effective tax burden for income tax on the result was 36% (10% in 2017). 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. No final assessments have been received yet for subsequent years. In the financial statements for this year and previous years, tax is recognised on the basis of the tax returns submitted, the underlying principles adopted in those tax returns and any adjustments to previous years.

The rates of corporate income tax for the coming years have been reduced (see note 10). The effect of the recalculation of the deferrals has led to a write-down of the deferrals for an amount of €22 million and has been recognised in the profit and loss account 2018.

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 income taxes. Income tax is recognised in the income statement, except insofar as it relates to items recognised directly in equity via the comprehensive income, in which case the tax is recognised in equity via the comprehensive income.

All taxes 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 in force 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.