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Financial statements

8. Taxes

 

2019

2018

Current tax

14.3

12.3

Current tax (previous year adjustments)

-2.0

-1.0

Deferred tax

6.6

4.2

Tax charge (income)

18.9

15.5

Reconciliation of result before taxes and tax charge

 

2019

2018

Result before taxes

44.7

69.8

Applicable tax charge at average statutory tax rate

6.3

17.9

Income not subject to tax

-6.7

-3.4

Expenses not deductible for tax purposes

3.1

3.0

Effect of the reversal of tax assets

15.2

1.0

Currency effects

1.6

 

Changes in tax rates

 

-0.1

Other effects

-0.6

-2.9

Tax charge (income)

18.9

15.5

Average tax rate on operations

42.3%

22.2%

The average statutory tax rate is the average of the statutory tax rates in the countries where Corbion operates, weighted on the basis of the result before taxes in each of these countries. The difference between these rates for 2019 (14.1%) and 2018 (25.6%) is caused by the 2019 impairment related to Brazil as this is a high-tax country (34% corporate tax rate).

The partial release of the contingent liability which was recorded as a result of the impairment resulted in income not subject to tax under the provisions of the participation exemption (impact € -3.7 million). 

Expense not deductible for tax purposes consists of negative results of participations which are non-deductible under the participation exemption (impact € 1.6 million) as well as the effect of non-deductible costs in multiple jurisdictions (impact € 1.5 million).

The effective tax rate is impacted significantly by the impairment in Brazil as no deferred tax asset has been recognized for the resulting deductible temporary difference (impact € 12.0 million). In addition, minimal deferred tax asset has been recognized for the tax losses incurred in 2019 in Brazil (impact € 2.1 million).

The impact of currency effects (€ 1.6 million) is caused by reporting entities which have a tax reporting currency which deviates from their functional currency. Other effects include adjustments in respect of current year events and the impact of changes to relevant regulations, facts, or other factors compared to those used in establishing the current tax position or deferred tax balance in previous years (impact € -0.6 million).

The realization of deferred tax assets depends on the expected future profitability. Deferred tax assets are not recognized if it is not probable that a tax benefit can be realized.

Breakdown of the tax charge recognized in equity

 

2019

2018

Tax liability due to loan-related exchange rate differences

-0.7

0.6

Tax liability due to hedge results of financial instruments

1.3

-0.5

Tax charge due to remeasurement of defined benefit obligation

 

0.1

Tax charge (income) recognized in equity

0.6

0.2