10. Income tax
|
(in millions of euros) |
2024 |
2023 |
|
Reconciliation with effective tax rate |
||
|
Result before tax from continuing operations |
-118 |
-379 |
|
Income tax based on Dutch corporate income tax rate (25.8%) |
30 |
98 |
|
Addition of mixed costs, investment tax credit, etc. |
- |
5 |
|
Change in valuation of deferred tax assets |
-37 |
-9 |
|
Permanent difference: Untaxed results of restructuring and settlement in Germany |
3 |
17 |
|
Other effects |
-2 |
- |
|
Total income tax |
-6 |
111 |
Corporation tax is calculated based on the applicable tax rates in the Netherlands, taking into account the tax rules that give rise to permanent differences between the determination of the profit for commercial purposes and the determination for tax purposes. The tax provisions include the participation exemption and the limitation of deductible expenses.
The Netherlands has pillar two legislation in place. 'Pillar 2' is part of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) and focuses on ensuring a minimum level of taxation for multinational corporations worldwide. These regulations are designed to combat tax avoidance by ensuring that large international companies pay a minimum effective tax rate on their global profits, regardless of where they operate. The legislation is effective for the Group's 2024 financial year.
The Group has estimated its potential exposure to pillar two taxes. This assessment is based on the latest available information on the financial performance of the constituent entities in the Group. Based on the assessment conducted, NS will use the temporary ‘safe harbour arrangement’ in the countries where it operates. The 'safe harbour arrangement' provides temporary simplifications and guidelines for companies to comply with the new international minimum taxes, which can ease the administrative burden.
Based on this assessment, no pillar two chargeback applies to 2024.
The effective tax rate for profit before corporation tax from continuing operations was -5% (2023: 29%). The deviation from the nominal tax burden is mainly due to write-down of deferred tax assets.
For the Dutch fiscal entity, there is agreement with the tax authorities on the tax returns up to and including 2021. A final assessment has been received for 2021, but not yet for the subsequent years. In the financial statements for this year and previous years, tax is recognised on the basis of the tax returns submitted up to and including 2023, the underlying principles adopted in those tax returns and any adjustments to previous years.
Accounting policy
Tax on the profit or loss for the financial year comprises the income tax that is payable or can be offset in the reporting period and deferred taxation. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity through other comprehensive income, in which case it is recognised in equity through other comprehensive income.
The tax to be paid or offset for the financial year is the expected tax charge on taxable profit for the financial year, calculated using the tax rates prevailing on the balance sheet date, plus adjustments to tax payable for prior years.
Almost all subsidiaries belonging to the Group are included in the NS fiscal unity for corporate income tax purposes, with the exception of foreign group companies.