2.2.4.1 16. Income taxes

A. Amounts recognised in statement of profit or loss

2.2.4.1.1

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The total tax expense excluded the Group’s share of tax expense of the equity-accounted investees of €907 thousand (2016: €889 thousand), which has been included in ‘share of profit of equity accounted investees, net of tax’, see Note 16G.

2.2.4.1.2

B. Amounts recognised in Other Comprehensive Income (OCI)

2.2.4.1.2.1

Within the Group, loans are agreed between the different subsidiaries. Two of the loans in the United Kingdom are considered to form part of the net investment in the subsidiaries, and as such foreign exchange differences on these loans are recorded directly through other comprehensive income. For income tax purposes these

  foreign exchange differences are taxable or tax deductible. As the foreign exchange differences are recorded through other comprehensive income, the related current tax impact is also recorded through other comprehensive income for a positive amount of €290 thousand in 2017 (2016: €1,381 thousand positive).

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C. Reconciliation of effective tax rate

D. Movement in deferred tax balances

2.2.4.1.4

The Group expects that its accruals for tax liabilities are adequate for all open years based on its assessment of many factors, including interpretations of tax law and prior experience. The Group off-sets tax assets and liabilities if, and only if, it has a legally enforceable right to do so. The Group recognises deferred tax assets to the extent that it is considered probable based on business forecasts that sufficient taxable profits will be available.

E. Unrecognised deferred tax assets

Part of the deferred tax assets have not been recognised in respect of tax losses carried forward in Germany as the Executive Committee has established that it is uncertain whether future taxable profits would be available against which these losses can be utilised. The not recognized deferred tax assets have been included in the balance of unrecognised losses for €3.2 million at 31 December 2017 (31 December 2016: €3.9 million), with a tax effect of €0.9 million (31 December 2016: €1.1 million). The tax losses can be carried forward indefinitely, but the Executive Committee applies a ten year period to determine the adequacy whether tax losses can be utilised.

Furthermore, deferred tax assets have not been recognised in respect of tax losses incurred on the sale of real estate in the United Kingdom amounting to €2.7 million (31 December 2016: €3.2 million), with a tax effect of €0.5 million (31 December 2016: €0.6 million). These tax losses can only be utilised against a future tax gain on the sale of specific assets such as real estate. As the Executive Committee does not have plans to dispose real estate, the recovery of the deferred tax asset is highly uncertain and as such not recognised.

In 2017 in the Netherlands a deferred tax asset is recognised related to individual real estate where the fiscal carrying amount is higher than the book carrying amount at the end of the year and there is no intention to sell or demolish this particular real estate. This concerns at 31 December 2017 an amount of €2.8 million (31 December 2016: €2.9 million), with a tax effect of €0.7 million (31 December 2016: €0.7 million). 

 F. Tax Group

The Company and the Dutch subsidiaries, in which the Company has a 100% interest, form a tax group for the purpose of income tax, of which ForFarmers N.V. is the head of the tax group. For VAT, a comparable tax group exists for the Dutch subsidiaries, which also includes the majority shareholder Coöperatie FromFarmers U.A. which is the head of this tax group. The total current receivable or liability towards the tax authorities is accounted for in the statement of financial position of the head of the tax group. Settlement of taxes within this tax group takes place as if each company is independently liable for tax. Each participating subsidiary is jointly and severally liable for possible liabilities of the tax group as a whole. As of 1 January 2018 Coöperatie FromFarmers U.A. is no longer part of the VAT tax group and ForFarmers N.V. is the head of the VAT tax group.

A number of companies in Germany form a tax group for the purposes of income tax (‘Organschaft’ for Körperschaftsteuer and Gewerbesteuer). Settlement of taxes within this tax group takes place as if each company is independently liable for tax.

The companies in the United Kingdom form a tax group for the purposes of income tax (‘Group Relief’) and VAT. Settlement of taxes within this tax group takes place as if each company is independently liable for tax.

The above-mentioned effective tax rate deviates from the statutory tax rate mainly due to the impact of the following main items:

Netherlands 

The effective tax rate is lower due to innovation box benefits and the recognition of the deferred tax assets relating to the individual real estate where the fiscal carrying amount is above the carrying amount at the end of the year. These deferred tax assets were not recognized in previous years.

Germany

The effective tax rate is lower due to recognition of the deferred tax assets relating to the net operating losses.

Belgium

The effective tax rate is higher because of non tax deductible items and deferred tax asset revaluation due to a tax rate change.

UK

The effective tax rate is lower due to a change regarding prior years. This change is  mainly due to the recognition of a deferred tax asset relating to the tax deductibility of certain assets.

 G. Taxes on equity-accounted investees

Corporate income taxes on the results of HaBeMa are settled with the tax authorities by ForFarmers Langförden, Germany (indirect shareholder). The results of HaBeMa are accounted for based on the equity method and are presented net of tax in the consolidated statement of profit and loss. These corporate income tax charges are deducted from the share of profit of equity-accounted investees for an amount of €907 thousand (2016: €889 thousand).

Trade taxes ('Gewerbesteuer') applicable to HaBeMa are borne by the entity itself.