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2.6 Income tax
Accounting policies
The taxes recognised in the consolidated income statement include the Group companies' taxes on current net profits on an accrual basis, prior period tax adjustments and changes in deferred taxes. The Group companies' taxes have been calculated from the taxable income of each company determined by local jurisdiction. The tax impact of items recognised in other comprehensive income has been recognised correspondingly in other comprehensive income.
Deferred tax assets and liabilities are recognised on all temporary differences arising between the tax bases and carrying amounts of assets and liabilities. Deferred tax liability has not been calculated on goodwill insofar as goodwill is not tax deductible. Deferred tax on subsidiaries' undistributed earnings is not recognised unless a distribution of earnings is probable, causing tax implications.
Deferred tax has been determined using the tax rates enacted at the balance sheet date, and as the rates changed, at the known new rate. A deferred income tax asset is recognised to the extent that it is probable that it can be utilised against future taxable income. The Group's deferred income tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority.
The most significant temporary differences arise from defined benefit pension plans, property, plant and equipment (depreciation difference), provisions and measurements at fair value of asset items in connection with acquisitions.
€ million 2017 2016
Current tax -55.7 -41.3
Tax for prior years -0.4 -0.8
Deferred tax -2.7 10.7
Total -58.8 -31.4
Reconciliation between tax expense shown in the income statement and tax calculated at parent's rate
€ million 2017 2016
Profit before tax 327.6 145.2
Tax at parent's rate 20.0% -65.5 -29.0
Effect of foreign subsidiaries' different tax rates 2.2 3.3
Effect of tax-free income 15.4 0.6
Effect of expenses not deductible for tax purposes -4.6 -7.1
Effect of tax losses -4.9 -4.9
Effect of consolidation 0.3 6.4
Tax for prior years -0.4 -0.8
Effect of change in tax rate -0.3 0.3
Others -0.9 -0.2
Tax charge -58.8 -31.4
The impact of the corporation tax rate changes, effective from 1 January 2018 in Norway and Latvia, on taxes for the financial year 2017 was €-0.3 million. The impact of the corporation tax rate change, effective from 1 January 2017 in Norway, on the deferred tax for the financial year 2016 was €0.3 million.