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Notes to the Consolidated Financial Statements (continued)
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12.2 Deferred tax assets and liabilities
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Introduction Report of the Executive Board Report of the Supervisory Board
2018
2017
Income tax using the Company's domestic tax rate
25.0
660
25.0
708
Effect of tax rates in foreign jurisdictions
0.2
5
0.6
17
Effect of non-deductible expenses
2.6
69
2.6
75
Effect of tax incentives and exempt income
(3.2)
(84)
(3.4)
(98)
De-recognition/(recognition) of deferred tax assets
0.4
11
Effect of unrecognised current year losses
3.4
89
1.7
49
Effect of changes in tax rates
(0.1)
(3)
(1.6)
(45)
Withholding taxes
3.2
84
2.3
65
Under/(over) provided in prior years
(1.4)
(37)
(0.5)
(14)
Other reconciling items
(1.0)
(26)
(0.4)
(13)
28.7
757
26.7
755
The 2018 effective tax rate is negatively impacted by non-deductible impairments, while 2017 included a
one-off tax benefit as a result of the US tax reform.
For the income tax impact on items recognised in other comprehensive income, please refer to note 12.3.
Financial Statements
Sustainability Review
Heineken N.V. Annual Report 2018^10
Other Information
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following items:
Assets Liabilities Net
In millions of
2018
2017
2018
2017
2018
2017
P,P&E
92
72
(502)
(521)
(410)
(449)
Intangible assets
29
41
(1,267)
(1,333)
(1,238)
(1,292)
Investments
44
54
(5)
(6)
39
48
Inventories
40
31
(10)
(9)
30
22
Borrowings
11
32
(28)
11
4
Post-retirement obligations
231
300
(6)
(6)
225
294
Provisions
146
131
(27)
(30)
119
101
Other items
457
467
(376)
(382)
81
85
Tax losses carried forward
395
460
395
460
Tax assets/(liabilities)
1,445
1,588
(2,193)
(2,315)
(748)
(727)
Set-off of tax
(823)
(820)
823
820
Net tax assets/(liabilities)
622
768
(1,370)
(1,495)
(748)
(727)
Of the total net deferred tax assets of €622 million as at 31 December 2018 (2017: €768 million),
€225 million (2017: €253 million) is recognised in respect of subsidiaries in various countries where there
have been losses in the current or preceding period. Management's projections support the assumption
that it is probable that the results of future operations will generate sufficient taxable income to utilise
these deferred tax assets. This judgement is performed annually and based on budgets and business plans
for the coming years, including planned commercial initiatives.
No deferred tax liability has been recognised in respect of undistributed earnings of subsidiaries, joint
ventures and associates, with an impact of €80 million (2017: €75 million). This because HEINEKEN is able
to control the timing of the reversal of the temporary differences, and it is probable that such differences
will not reverse in the foreseeable future.
Tax losses carried forward
HEINEKEN has tax losses carried forward of €3,494 million as at 31 December 2018 (2017: €3,593 million), out
of which €356 million (2017: €137 million) expires in the following five years. €228 million (2017: €434 million)
will expire after five years and €2,911 million (2017: €3,023 million) can be carried forward indefinitely
Deferred tax assets have not been recognised in respect of tax losses carried forward of €1,664 million
(2017: €1,619 million) as it is not probable that taxable profit will be available to offset these losses. €103 million
(2017: €78 million) expires in the following five years. €40 million (2017: €57 million) will expire after five
years and €1,521 million (2017: €1,484 million) can be carried forward indefinitely.
