Corporate income tax was calculated on the basis of the applicable tax rates, taking account of the tax rules and the valuation of temporary differences.
The effective tax rate for the profit subject to corporate income tax was 7%, compared to 19% in 2016. The tax charge in 2017 was €2 million (in 2016 this was €49 million). It can be broken down as follows:
Result before tax | 27 |
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Income tax based on Dutch tax rate (25%) | -7 |
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Effect of participation exemption | 8 |
Effect of transferring rolling stock from Ireland to the Netherlands | -85 |
Effect of variant tax rates in foreign jurisdictions | 17 |
Effect of upward adjustment in deferred tax assets resulting from higher future taxable profits in the Netherlands | 67 |
Effect of upward adjustment in deferred tax assets at Abellio Germany | 5 |
Effect of non-deductible ACM fine | -10 |
Effect of additional tax liability for ‘various costs’, investment tax credit, etc. | 3 |
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Income tax 2017 (7%) | -2 |
The effect of the participation exemption (€8 million) covers inter alia the disposal of the shares in Qbuzz.
The effect of the rolling stock being transferred from Ireland to the Netherlands (-€85 million) consists of the change to the tax treatment of the lease rentals over the period 2013-2017 ( -€97 million) and the effect of the lower Irish tax rate on the profit realised on the actual transfer of the main rail network rolling stock from Ireland to the Netherlands (€12 million). That is the result of the agreement with the tax authorities of Ireland and the Netherlands about the market value of the rolling stock being transferred and of the completion of the tax audit that the Dutch tax authority had initiated into the tax treatment of the lease contracts that the Dutch companies had signed.
The effect of the differing tax rates in foreign jurisdictions (€17 million) is determined in particular by the lower Irish tax rate for the ordinary profit of NSFSC (€15 million). The remainder refers to the differing tax rates in the United Kingdom and in Germany.
The effect of the upward valuation of the Dutch component of the deferred tax asset (€67 million) is the consequence of the higher expected profits of the group tax entity in the Netherlands because of the transfer of the main rail network rolling stock. The effect of the upward valuation of the German component of the deferred tax asset (€5 million) is the consequence of the higher expected profits of Abellio because of the bids that it won.