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32. Deferred tax assets and liabilities

32.1 Recognized deferred tax assets and liabilities

32.1 Recognized deferred tax assets and liabilities

€ million

2019

Acquisition/Disposals

FX acquisition

R&D Adjustment

Current Year Movement

OCI - Cash flow hedges

OCI - Pensions

Effect of movements in exchange rate

2020

Intangible assets

- 33

- 563

25

0

27

0

0

36

- 508

Property, plant and equipment

- 18

0

 

0

- 1

0

0

0

- 19

Inventories

274

0

 

0

82

0

0

- 3

353

Trade and other receivables

58

0

 

0

- 6

0

0

0

52

Employee benefits

44

0

 

0

5

0

2

- 5

46

Provisions

6

0

 

0

3

0

0

0

9

Other short-term liabilities

- 203

0

 

0

57

- 23

0

- 6

- 175

Net lease assets/liabilities

0

0

 

0

1

0

0

0

1

Unused tax losses

239

132

- 7

0

- 113

0

0

- 10

241

Unused tax credits

455

0

 

- 38

23

0

0

- 3

437

Total net deferred tax assets/liabilities (-)

822

- 431

18

- 38

78

- 23

2

9

437

€ million

2018

Acquisition/Disposals

FX acquisition

R&D Adjustment

Current Year Movement

OCI - Cash flow hedges

OCI - Pensions

Effect of movements in exchange rate

2019

Intangible assets

- 52

0

0

0

19

0

0

0

- 33

Property, plant and equipment

- 21

0

0

0

3

0

0

0

- 18

Inventories

200

0

0

0

74

0

0

0

274

Trade and other receivables

36

0

0

0

22

0

0

0

58

Employee benefits

48

0

0

0

- 5

0

1

0

44

Provisions

3

0

0

0

3

0

0

0

6

Other short-term liabilities

- 222

0

0

0

38

- 19

0

0

- 203

Net lease assets/liabilities

0

0

0

0

0

0

0

0

0

Unused tax losses

291

0

0

0

- 58

0

0

6

239

Unused tax credits

438

0

0

26

- 9

0

0

0

455

Total net deferred tax assets/liabilities (-)

721

0

0

26

87

- 19

1

6

822

Total net deferred tax assets of € 437 million have been recognized as at December 31, 2020. Based upon the level of past taxable income and projected future taxable profits over the periods in which the deductible temporary differences are estimated to reverse, the Group believes it is probable that the benefits of the recognized deferred tax assets will be realized.

The Group saw a decrease of the deferred tax assets and an increase to the deferred tax liability balance. This is driven by the following items:

  • Purchase Price Accounting: recognition of deferred tax liabilities on assets acquired per purchase accounting analysis.

  • Deferred Tax Assets on Losses: substantial utilisation of tax losses carried forward against taxable profit in key entities which is partially compensated by the recognition of new deferred tax assets on losses following the acquisition of Ra Pharmaceuticals inc and Engage Therapeutics Inc. In line with prior years, the loss utilisation is also partly compensated by a decrease of the deferred tax liability on recapture losses.

  • R&D tax credit: R&D Tax Credit refund received versus further build-up of R&D tax credit deferred tax assets following R&D investments.

Other items are a result of the movements on UCB’s statement of financial position items and reassessment following tax law changes.

Tax reforms

Impact of tax law and tax rate changes, mainly in Switzerland, were assessed by management and remeasurement of the deferred tax balances took place as appropriate.

R&D tax credits

The group recorded increased deferred tax assets on tax credits. The total deferred tax asset in respect of R&D tax credits at year end is € 405 million (2019: € 439 million) which will result in an actual cash tax benefit in future periods. Other tax credits for € 32 million were also recorded.

Deferred tax assets on losses

UCB has seen both a substantial utilization of tax losses carried forward, partially compensated by a decrease of deferred tax liabilities and an increase of the tax losses carried forward following the acquisition of Ra Pharmaceuticals Inc and Engage Therapeutics Inc. A deferred tax asset of € 241 million (2019: € 239 million) was recognized in respect of tax losses carried forward totaling € 1.06 billion (2019: € 1.09 billion) as the Group has concluded that the relevant entities will generate taxable profits in the foreseeable future against which these losses can be used and forecasts are deemed reliable taking into account the profile of the concerning entities and potential restrictions that could be available. These losses have arisen in jurisdictions in which UCB operates and do not expire. This period has seen no further recognition of losses and tax credits previously unrecognized. Undiscounted forecasts have been used to assess the availability of future taxable profits.