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3. Notes

18. Income tax expense (−) / credit

18. Income tax expense (−) / credit

€ million

2020

2019

Current income taxes

- 198

- 225

Deferred income taxes

79

80

Total income tax expense (-)/credit

- 119

- 146

The Group operates internationally, implying being subject to income taxes in many different tax jurisdictions.

The income tax expense on the Group’s profit before tax differ from the theoretical amount that would arise using the weighted average tax rate applicable to profits (losses) of the consolidated companies.

Income taxes recognized in the income statement can be detailed as follows:

€ million

2020

2019

Profit before income taxes

880

960

Income tax expense (-) calculated at domestic tax rates applicable in the respective countries

- 181

- 210

Theoretical income tax rate

21%

22%

Reported current income tax

- 198

- 225

Reported deferred income tax

79

80

Total reported tax charge

- 119

- 146

Effective income tax rate

13%

15%

Difference between theoretical and reported tax

62

64

Expenses non-deductible for tax purposes

- 35

- 28

Non-taxable income

1

19

Increase (-) / decrease of liabilities for uncertain tax positions

- 3

- 53

Effect of previously unrecognized tax credits and losses used in the period

0

3

Tax credits

108

89

Variation in tax rates

- 1

42

Effect of reversal of previously recognized DTA1 on tax losses

0

0

Current tax adjustments related to prior years

8

17

Deferred tax adjustments related to prior years

9

6

Net effect of previously unrecognized DTA and non-recognition of current year deferred tax assets

- 30

- 38

Withholding tax

1

- 2

Other taxes

6

9

Total difference between theoretical and reported income tax

62

64

  • 1 DTA = Deferred tax asset

The theoretical income tax rate remained stable compared to the prior year.

The effective tax rate of 13% is slightly below the prior year effective tax rate and is composed of a current tax charge and a deferred tax credit. The key drivers for the rate can be summarized as follows: