118
Notes to the Consolidated Financial Statements (continued)
32. Contingencies
Other contingencies
Guarantees
Report of the
Report of the
Financial
Sustainability
Other
Introduction
Executive Board
Supervisory Board
Statements
Review
Information
Heineken N.V. Annual Report 2017
HEINEKEN's significant contingencies are described below.
HEINEKEN operates in a high number of jurisdictions, and is subject to a wide variety of taxes per jurisdiction. Tax legislation can be highly
complex and subject to interpretation. Asa result, HEINEKEN is required to exercise significant judgement in the recognition of taxes payable and
determination of tax contingencies.
The tax contingencies mainly relate to tax positions in Latin America and include a large number of cases with a risk assessment lower
than probable but higher than remote. Assessing the amount of tax contingencies is highly judgemental, and the timing of possible
outflows is uncertain. Our best estimate of tax related contingent liabilities is €897 million (2016: €443 million), out of which €1 70 million
(2016: €188 million) qualifies for indemnification. For several tax contingencies that were part of acquisitions, an amount of €382 million
(2016: €98 million) has been recognised as provisions in the balance sheet.
HEINEKEN also has other contingencies, for which, in the opinion of management and its legal counsel, the risk of loss is possible but not probable.
Contingencies involve inherent uncertainties including, but not limited to, court rulings, negotiations between affected parties and governmental
actions. The most significant contingencies relate to civil cases in Brazil. Management's best estimate of the financial effect for these cases
is €57 million (2016: €14 million). For the other contingencies that were part of acquisitions, an amount of €49 million (2016: nil) has been
recognised on balance.
More than
In millionsof Total2017 Lessthan 1 year 1-5years 5years Total2016
Guaranteesto banks for loans (to third parties) 307 94 202 11 335
Other guarantees 978 149 431 398 771
Guarantees 1,285 243 633 409 1,106
Guaranteesto banks for loans relate to loans and advanced discounts to customers, which are given to external parties in the ordinary course
of business of HEINEKEN. HEINEKEN provides guarantees to the banks to cover the risk related to these loans. The increase in other guarantees
mainly relates to the acquisition of Brasil Kirin.
