TomTom 2014 Annual Report Download - page 61

Accounting policy
Current and deferred taxes are recognised as an expense or income in the profit and loss account, except when they relate to items credited
or debited directly to equity. In this case, the tax is also recognised directly in equity, or where it arises from the initial accounting for a business
combination.
The group's income tax expense is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date.
11. Deferred income tax
As at 31 December 2014, the group had a deferred tax liability of €167 million (2013: €172 million) and a deferred tax asset of €18 million
(2013: €10 million). The deferred tax asset and liability result from timing differences between the tax and accounting treatment of the
amortisation of intangible assets, tax loss carry forwards, cash-settled share-based payments and certain provisions.
(€ in thousands) 2014 2013
DEFERRED TAX:
To be recovered after more than 12 months –147,016 –160,141
To be recovered within 12 months –1,097 –1,905
TOTAL –148,113 –162,046
The movement of deferred tax is as follows:
(€ in thousands) Stock compensation expense Other Intangible
assets
Provisions Assessed
losses
Total
BALANCE AS AT 31 DECEMBER 2012 964 –330 –207,129 9,115 40,081 –157,299
Acquisitions through business combination 0 0 –5,279 0 685 –4,594
(Charged)/released to income 362 –265 15,794 –2,662 –14,841 –1,612
Currency translation differences 0 0 1,527 –215 147 1,459
BALANCE AS AT 31 DECEMBER 2013 1,326 –595 –195,087 6,238 26,072 –162,046
Acquisitions through business combination 0 0 –3,705 0 0 –3,705
(Charged)/released to income 668 437 12,899 497 –2,415 12,086
(Charged)/released to equity 0 0 0 436 6,430 6,866
Currency translation differences 0 –200 –4,386 –460 3,732 –1,314
BALANCE AS AT 31 DECEMBER 2014 1,994 –358 –190,279 6,711 33,819 –148,113
Deferred tax balances are presented in the balance sheet as follows:
(€ in thousands) 2014 2013
Deferred tax assets 18,438 9,681
Deferred tax liabilities –166,551 –171,727
TOTAL –148,113 –162,046
The group has in some jurisdictions tax loss carry forwards that have not been recognised as deferred tax assets, as the amounts as well as
possible future recovery of these losses against future taxable income are uncertain. As at 31 December 2014, these losses amounted to
approximately €90 million (2013: €100 million).
Accounting policy
Deferred taxes are calculated using the liability method. Deferred income taxes reflect the net tax effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax
assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled, using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date.
The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which
the group expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets are recognised when it is probable that sufficient taxable profits will be available against which the deferred tax assets
can be utilised. The carrying amounts of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Significant estimates
The determination of the group's provision for income tax as well as deferred tax assets and liabilities involves significant judgements and
estimates on certain matters and transactions, for which the ultimate outcome may be uncertain. If the final outcome differs from the group's
estimates, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is
made.
CONTENTS OVERVIEW MANAGEMENT
BOARD REPORT CORPORATE GOVERNANCE SUPERVISORY BOARD REPORT FINANCIAL
STATEMENTS SUPPLEMENTARY
INFORMATION
ANNUAL REPORT AND ACCOUNTS 2014 / 61