FINANCIAL STATEMENTS - KPN

Income tax expense
Amounts in millions of EUR 2012 2011
Current tax -207 -94
Changes in deferred taxes -63 -128
Income tax benefit/(charge) -270 -222
The reconciliation from the Dutch statutory tax to the effective tax rate is explained in the table below.
Amounts in millions of EUR 2012 2011
Profit before income tax 1 976 1,795
Taxes at Dutch statutory tax rates 2 -244 -449
Tax rate differences of foreign operations 3 -47 -51
Non-taxable income and non-deductible expenses 4 -81 -80
Innovation tax facilities 6 26 197
(De)recognition of deferred tax positions 5 :
– related to prior years 126 203
– related to the current year -34 -5
Other -16 -37
Income tax benefit/(charge) -270 -222
Effective tax rate 27.6% 12.4%
1) Excluding the share in profits or losses of associates and joint ventures.
2) Taxes at Dutch statutory tax rates are calculated on the basis of profit before income tax (excluding the share of profits of associates and joint ventures)
and the applicable Dutch corporate income tax rate of 25% in 2012 and 2011.
3) Tax rate differences of foreign operations reflect the impact of different tax rates in the fiscal jurisdictions in which KPN operates. In 2012 and 2011,
the corporate tax rates amounted to 15.8% in Germany, 34% in Belgium and 40% in the United States. The German trade tax rate was 15.6%.
4) Non-taxable income and non-deductible expenses represent adjustments for income not subject to taxation.
5) (De)recognition of deferred tax positions reflects the effects of valuation or non-valuation of tax loss carry forwards and deductible temporary differences.
The amount related to prior years is mainly attributable to E-Plus.
6) In 2011, KPN reached an agreement with the Dutch tax authorities with regard to the application of the so called innovation tax facilities. The agreement
has retroactive effect to January 1, 2007 resulting in a one-off benefit of EUR 118 million in 2011 mainly reflecting the period 2007 to 2010. In 2012 the amount
includes a downward adjustment of EUR 14 million relating to 2011.
Deferred tax assets and liabilities
Amounts in millions of EUR December 31, 2012 December 31, 2011
Deferred tax assets 1,822 1,831
– of which: to be recovered after 12 months 1,787 1,805
– of which: to be recovered within 12 months 35 26
Deferred tax liabilities 440 793
– of which: to be realized after 12 months 129 412
– of which: to be realized within 12 months 311 381
Deferred tax assets and liabilities 1,382 1,038
Depending on future taxable results, a part of deferred tax assets relating to tax loss carry forwards now considered to be recoverable after
12 months may be recoverable in the short term, whereas, tax loss carry forwards now considered to be recoverable within 12 months may
be recoverable in the long term.
KPN | Annual Report 2012 107