2020

2019

 

 

 

Taxation to be paid

10,583

13,021

 

 

 

Origination and reversal of temporary differences

-3,101

1,675

Changes in tax rates

791

390

 

 

 

Deferred taxation

-2,310

2,065

 

 

 

Total taxation expense

8,273

15,086

 

2020

2019

 

 

 

Corporate tax receivable

1,764

-

 

 

 

 

2020

2019

 

 

 

Corporate tax payable

5,283

4,629

Other tax payable

11,257

10,186

 

 

 

Current tax payble

16,540

14,815

Amounts recognised in OCI

 

 

2020

 

 

2019

 

 

Before tax

Tax (-expense) benefit

Net of tax

Before tax

Tax (-expense) benefit

Net of tax

Items that will not be reclassified to profit or loss

 

 

 

 

 

 

Revaluation gains/(losses) on equity instruments designated at fair value through other comprehensive income

-4,821

1,161

-3,660

174

-123

51

Items that are or may be reclassified subsequently to profit or loss

 

 

 

 

 

 

Foreign operations – foreign currency translation differences

-1,209

-

-1,209

120

-

120

 

 

 

 

 

 

 

Total amounts recognised in OCI

-6,030

1,161

-4,869

294

-123

171

The other comprehensive income for Triodos Bank consists of revaluations of equity instruments at fair value through OCI and foreign currency translation differences. Investment securities are the related balance sheet account for the revaluations, for which any realised result will not subsequently be taken into the profit or loss. The foreign currency translation difference relates to the UK subsidiary for the part not subject to the net investment hedge. Tax on both of these items can be subject to the participation exemption under Dutch Tax Law.

Reconciliation of effective tax rate

 

2020

2019

 

 

 

Result before taxation

35,476

54,091

Statutory tax rate

25.0%

25.0%

 

 

 

Statutory tax amount

8,869

13,523

 

 

 

Income Non Taxable

-401

-284

Tax Deduction Not Expensed

-

-45

Expenses Non Deductible

1,146

1,831

Impact tax rate differences - stat rate foreign jurisdictions

-656

358

Restatement of deferred taxation items as the result of amended tax rates

791

390

Incentives for gifts, community investment and innovation

-1,084

-550

Other reconciling items

-392

-137

 

 

 

Effective tax amount

8,273

15,086

 

 

 

Effective tax rate

23.3%

27.9%

Triodos Bank is subject to income taxes in the Netherlands and several other jurisdictions which levy corporate income tax at different rates.

The effective tax rate (‘ETR’) amounted to 23.3% (2019: 27.9%) and differs from the theoretical rate that would arise using only the Dutch corporate tax rate (25%).  Other than mentioned differences and changes in applicable local corporate income tax rates, the difference can partly be attributed to the non-taxable release of a provision regarding the closure of the credit intermediation office in France ad EUR 1.7 million in 2020.

Following the decision not to establish a banking branch in France, a provision was recognized of EUR 3.4 million in 2019. This provision was treated as a non-tax deductible expense under local tax legislation and therefore resulted in a higher ETR. The subsequent release of a part of the provision of EUR 1.7 million in 2020, following lower expenditure than originally anticipated, results in non-taxable income and therefore a lower ETR in 2020.

Movement in deferred tax balances

2020

 

 

 

Balance at 31 December

 

Net balance at 1 January

Recognised
in profit or loss

Recognised
in OCI

Net

Deferred tax assets

Deferred tax liabilities

Property and equipment, and intangible assets

-4,657

-203

-

-4,860

1,093

5,953

Investment securities at FVOCI

-573

77

1,161

665

76

-589

Effective interest method application

5,121

-578

-

4,543

2,901

-1,642

Allowance for expected credit losses

1,002

2,226

-

3,228

2,703

-524

Employee benefits

139

42

-

181

-

-181

Lease liability

208

-80

-

128

77

-51

Loan modifications

85

-38

-

47

46

-1

Tax losses carried forward

6,318

-200

-

6,118

7,488

1,372

Other

-584

1,064

-

480

480

-

 

 

 

 

 

 

 

Tax assets (liabilities)

7,059

2,310

1,161

10,530

14,864

4,337

2019

 

 

 

Balance at 31 December

 

Net balance at 1 January

Recognised
in profit or loss

Recognised
in OCI

Net

Deferred tax assets

Deferred tax liabilities

Property and equipment, and intangible assets

-3,740

-917

-

-4,657

1,699

6,356

Investment securities at FVOCI

-428

-21

-124

-573

194

767

Effective interest method application

5,644

-523

-

5,121

5,295

174

Allowance for expected credit losses

1,060

-58

-

1,002

1,002

-

Employee benefits - Vitality leave

99

40

-

139

139

-

Lease liability

90

118

-

208

208

-

Loan modifications

119

-34

-

85

85

-

Tax losses carried forward

6,897

-579

-

6,318

7,802

1,485

Other

-493

-91

-

-584

-326

283

 

 

 

 

 

 

 

Tax assets (liabilities)

9,248

-2,065

-124

7,059

16,098

9,065

Deferred tax balances

 

2020

2019

 

Deferred tax assets

Deferred tax liabilities

Deferred tax assets

Deferred tax liabilities

Current balance

1,300

-219

1,431

1,092

Non-current balance

13,564

4,556

14,667

7,973

 

 

 

 

 

Total

14,864

4,337

16,098

9,065

The deferred tax asset relates for an amount of EUR 6.8 million (2019: EUR 7.3 million) to tax losses incurred by the German branch for which it is expected that these will be fully recovered against future profits. Compensation is expected in the coming years. Under the German corporate income tax code tax losses have no expiration date. The remaining deferred tax asset relates to temporary differences because of differences between accounting rules and tax rules.

The deferred tax liability relates for an amount of EUR 1.4 million (2019: 1.5 million) to a taxable temporary difference following the tax losses incurred by the German branch over the period 2009 – 2011 amounting to EUR 6.8 million which have been offset against taxable income in the Triodos Dutch corporate income tax return over the same period. The Dutch corporate income tax act 1969 allowed income tax deduction on losses incurred by foreign branches of a Dutch resident taxpayer in so far that these tax losses could not be recovered in the country of residence till 2011. This Dutch income tax deduction is subsequently reversed when the branch recovers profitability and the incurred tax losses are offset in the local income tax return, resulting in a taxable temporary difference. Under the German corporate income tax code tax losses have no expiration date.

Fiscal unity

Triodos Bank, as a parent company, forms a tax unity for corporate income tax purposes with Triodos Investment Management as subsidiary. The method chosen for the taxation set-off between Triodos Bank and its subsidiary is that of proceeding as if the legal entities were independently liable to pay tax. In fact, the legal entities are jointly and severally liable for the tax liabilities of the companies belonging to the fiscal unity.