FINANCIAL STATEMENTS - KPN

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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
Consolidated Financial Statements Notes to the Consolidated Statement of Income continued Deferred tax assets Deductible temporary differences forwards Goodwill intangibles 3 liabilities Total Offset against Tax loss carry Other Pension provisions Other 2 deferred tax Balance as of January 1, 2011 1,061 209 479 106 499 -436 1,918 Exchange differences 1 – – – -1 – − Income statement benefit/(charge) 4 -144 45 -33 -15 114 – -33 Change in tax rates – – – – – – – Tax charged to equity – – – – -27 – -27 Reclassification 6 – – – -2 -26 -22 Transferred to held for sale – – – -3 -4 2 -5 Balance as of December 31, 2011 1 924 254 446 88 579 −460 1,831 Exchange differences – – – – – – – Income statement benefit/(charge) 5 181 -56 -8 -8 -154 – -45 Change in tax rates – – – – – – – Tax charged to equity – – – – 78 – 78 Reclassification – – – – 12 -58 -46 Changes in consolidation 4 – – – – – 4 Transferred to held for sale – – – 8 -8 – – Balance as of December 31, 2012 1 1,109 198 438 88 507 -518 1,822 1) At December 31, 2012, deferred tax assets of EUR 873 million and EUR 511 million were not recognized for loss carry forwards and deductible temporary differences respectively. 2) Other deductible temporary differences at December 31, 2012 include property, plant and equipment of EUR 272 million (2011: EUR 327 million), cash flow hedge reserves of EUR 77 million (charged to equity, 2011: EUR -1 million), revenue recognition of EUR 22 million (2011: EUR 16 million), software of EUR 28 million (2011: EUR 52 million) and deferral of expenses for fiscal purposes of EUR 21 million (2011: EUR 33 million). 3) Mainly relates to UMTS licenses in Germany. 4) In the course of 2011 a restructuring of the Dutch operations of Getronics took place as a result of which these loss carry forwards were utilized and higher amortizable assets (goodwill) were recognized. 5) Mainly relates to the revaluation of the DTA in Germany. Deferred tax charged to equity relates mainly to movements in the hedge reserve. Deferred tax liabilities Taxable temporary differences Deferred liability due to losses German permanent establishment Software development Accelerated depreciation 1 Other 2 Offset against deferred tax assets Total Balance as of January 1, 2011 851 67 213 261 -436 956 Income statement charge – 22 118 -44 – 96 Tax payable due to E-Plus loss recapture -332 – – – – -332 Change in tax rate – −2 2 − – – Changes in consolidation – – – 3 – 3 Reclassification – – – – -26 -26 Transfer to current tax – 166 -48 -22 – 96 Transferred to held for sale – – – -2 2 – Balance as of December 31, 2011 519 253 285 196 −460 793 Income statement charge – -15 19 14 – 18 Tax payable due to E-Plus loss recapture -314 – – – – -314 Changes in consolidation – – – 7 – 7 Reclassification – – – 12 -58 -46 Transfer to current tax – -10 1 -10 – -19 Transferred to held for sale – – – 1 – 1 Balance as of December 31, 2012 205 228 305 220 –518 440 1) Relates to Property, plant and equipment in the Netherlands. 2) Other taxable temporary differences at December 31, 2012, include intangible fixed assets of EUR 80 million (2011: EUR 76 million), property plant and equipment of EUR 58 million (2011: EUR 35 million) and provisions for early retirement and pension benefits of EUR 60 million (2011: EUR 64 million). 108 KPN | Annual Report 2012
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FINANCIAL STATEMENTS - KPN

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