(in millions of euros) | 2017 | 2016 |
Included in the income statement | | |
Current taxes | -145 | -22 |
Deferred taxes | 143 | -27 |
Total income tax | -2 | -49 |
| | | |
Reconciliation with effective tax rate | | |
Profit before tax | 27 | 261 |
| | | |
Income tax at Dutch tax rate for corporation tax (2017 en 2016: 25%) | -7 | -65 |
Non-deductible costs | -10 | -1 |
Other permanent differences | 9 | 6 |
Effect of the tax rate in foreign jurisdictions (different rate) | 17 | 10 |
Reversal devaluation deferred tax asset | 67 | - |
Settlement previous years | -78 | 1 |
Total income tax | -2 | -49 |
| | | |
Income tax on income and expenses recognised directly in equity | -2 | -11 |
Corporate income tax is calculated based on the applicable tax rates in the Netherlands, the United Kingdom, Ireland and Germany, taking into account the tax rules that produce permanent differences between the determination of the profit for commercial purposes and the determination for tax purposes. The tax rules include the participation exemption and limits to deductible costs.
The effective tax burden for income tax on the result was 7% (19% in 2016). The tax returns up to and including 2012 have been agreed with the Dutch Tax and Customs Administration. A final assessment has been received for 2013. An objection has been lodged against this assessment. No final assessments have been received yet for subsequent years. In the financial statements for this year and previous years, tax is recognised on the basis of the tax returns submitted, the underlying principles adopted in those tax returns and any adjustments to previous years.
The adjustments to previous years largely arise from the finalisation of the tax audit initiated by the Dutch tax authorities to examine the tax treatment of the lease contracts concluded by Dutch companies. The reversal of the downward value adjustment of the Dutch component of the deferred tax assets (€67 million) is the result of higher expected results from the fiscal unity in the Netherlands due to the transfer of the main rail network rolling stock.
Accounting policies
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 income taxes. Income tax is recognised in the income statement, except insofar as it relates to items recognised directly in equity via the comprehensive income, in which case the tax is recognised in equity via the comprehensive income.
All taxes are stated at nominal value.
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 in force on the balance-sheet date, plus adjustments to tax payable for prior years.
For the purpose of income tax, nearly all the subsidiaries belonging to the Group are part of the NS fiscal unity, with the exception of the foreign group entities.