The changes in deferred tax assets and liabilities are as follows.

Net operating losses that are categorised as tax losses under Dutch tax law and that arose in the Dutch subsidiaries can in general be offset against future profits recorded in the nine years after the year in which the loss was suffered, and can be offset against the profit recorded in the year preceding the year of the loss. There are comparable rules for the positions in foreign enterprises.

On 31 December 2017, after coordinating matters with the relevant tax authorities, the main rail network rolling stock portfolio, which had been held by the Irish subsidiary NSFSC, was transferred to a Dutch company. This company is part of the tax group in the Netherlands.

As at 31 December 2018, the Group had deferred tax assets of €156 million for the tax group in the Netherlands (€233 million as at 31 December 2017). These deferred tax assets are partly covered by deferred tax liabilities that produce taxable profits in the reference period through to 2025 and forecast profits through to 2025, mainly based on the Concern Plan 2019-2023. The forecasts assume the current breakdown of the Group’s activities, taking account of the main rail network franchise that started on 1 January 2015 and the effect of the transfer of the main rail network rolling stock portfolio from the Irish subsidiary NSFSC to the Netherlands on 31 December 2017. Given the expected profitability in the Netherlands, the deferred tax asset will be realised in 2019.

The Dutch corporate income tax rate for 2018 is 25% (2017: 25%). For the calculation of the deferred tax position of the Dutch entities, the applicable rate of 25% for 2019, 22.55% for 2020 and 20.5% for subsequent years has been used. For the calculation of the deferred tax position of the United Kingdom entities, the applicable rate of 19% for 2019 and 17% for subsequent years has been used.

Accounting policies

The deferred tax assets and deferred tax liabilities arise from temporary differences between the carrying amount of assets and liabilities in the financial reporting and the carrying amount for tax purposes. These are calculated on the basis of the tax rates that are expected to apply when the temporary differences are reversed, using tax rates enacted or substantively enacted as at the reporting date.

Deferred tax assets, including those deriving from tax loss carry-forwards, are measured if it is probable that sufficient tax profits will be available for claiming the losses and if possibilities for offsetting losses can be utilised.

Deferred tax assets and deferred tax liabilities are only netted if there is a formal netting right and the company intends to settle deferred tax positions simultaneously. Deferred tax positions are stated at nominal value.