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Notes to the Consolidated Financial Statements
9.3 Contingencies
Q O Heineken N.V. Report of the Report of the Financial Sustainability Other
s O Annual Report 2020 Introduction Executive Board Supervisory Board Statements Review Information
Other provisions
A provision for guarantees is recognised at the time the guarantee is issued. The provision is initially
measured at fair value and subsequently at the higher of the amount determined in accordance with the
expected credit loss model and the amount initially recognised.
HEINEKEN's contingencies are mainly in the area of tax, civil cases (part of other contingencies)
and guarantees.
Tax
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 possible. Assessing the amount of tax contingencies, is highly
judgemental, and the timing of possible outflows is uncertain. The best estimate of tax related contingent
liabilities is €707 million (2019: €957 million), out of which €70 million (2019: €171 million) qualifies for
indemnification. For several tax contingencies that were part of acquisitions, an amount of €197 million
(2019: €306 million) has been recognised as provisions and other non-current liabilities in the balance sheet
(refer to note 9.2 and 11.6).
Other contingencies
Other contingencies mainly relate to civil cases in Brazil. Management's best estimate of the potential
financial impact for these cases is €27 million (2019: €39 million). As at 31 December 2020, €15 million
(2019: €23 million) of other contingencies related to acquisitions is included in provisions (refer to note 9.2).
Guarantees
In millions of
Total 2020
Less than 1 year
1-5 years
More than 5
years
Total 2019
Guarantees to banks for
330
47
278
5
332
loans (to third parties)
Other guarantees
865
426
229
210
1,019
Guarantees
1,195
473
507
215
1,351
Accounting estimates and judgements
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. As a result, HEINEKEN
is required to exercise significant judgement in the recognition of taxes payable and determination of
tax contingencies.
Also for the other contingencies, HEINEKEN is required to exercise significant judgement to determine
whether 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.
Accounting policies
A contingent liability is a liability of uncertain timing and amount. Contingencies are not recognised in the
balance sheet because the existence can only be confirmed by occurrence or non-occurrence of one or more
uncertain future events not wholly within the control of HEINEKEN or because the risk of loss is estimated to
be possible (>5%) but not probable (<50%) or because the amount cannot be measured reliably.
Guarantees to banks for loans relate to loans and advances 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.
