11 - Income taxes

Accounting policies

Income tax expense

The expense or credit for income tax for the period is the tax expected to be payable or receivable on the current period's taxable income, based on the applicable income tax rate. This is then adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Both current and deferred taxes are recognized in profit or loss, except when they relate to items recognized in other comprehensive income or directly in equity. In these cases, the tax is also recognized in the respective areas.

Current income tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the Group operates and generates taxable income. As the group companies of Unica Groep B.V. and Unica Groep B.V. itself are part of the fiscal unity Penta Technologies B.V., the nominal rate of 25.8% was applied to these companies.

Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Current tax assets and tax liabilities are offset when the entity has a legally enforceable right to offset and intends either to settle on a net basis or realize the asset and settle the liability simultaneously.

Deferred taxation

Deferred tax is calculated using the liability method, based on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

• when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, associates, and interests in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits, and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

• when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, and when the deferred income tax assets and liabilities relate to income taxes levied by the same tax authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Uncertain tax positions

The Group’s policy is to comply with the applicable tax regulations in the Netherlands. The Group’s estimates of current income tax expense and liabilities are calculated assuming that all tax computations filed by the Group's subsidiaries will be subject to a review or audit by the relevant tax authority. Uncertain tax positions are generally assessed individually, using the most likely outcome method. The Group and the tax authority may have different interpretations of how regulations should be applied to actual transactions.

Source of estimation uncertainty

Recoverability of deferred tax assets

Deferred tax assets are recognized only to the extent where it becomes probable that these assets will be realized. Determining the amount that can be recognized requires significant judgment and depends mainly on the expected timing, level of taxable profits, tax planning strategies, and the existence of taxable temporary differences. The estimates primarily relate to losses carried forward in some of the Group’s subsidiaries. When the Group has a history of recent losses, the deferred tax asset arising from unused tax losses is recognized only to the extent that there is convincing evidence that enough future taxable profit will be generated. Estimated future taxable profit is not considered this evidence unless the entity has demonstrated the ability to generate significant taxable profit for the current year or there are certain other events providing sufficient evidence of future taxable profit. The introduction of new transactions and tax rules can also affect these judgments due to uncertainties in interpreting the rules and potential transitional rules.

Current income tax is the expected tax expense, payable or receivable on taxable income or loss for the period. This is calculated using tax rates enacted or substantively enacted at the reporting date and includes any adjustment to the tax payable in respect of previous years.

Income tax payable and assets

Current income tax payable and assets consist of the following items:

The effective tax rate is the average rate at which pre-tax profits are taxed. The actual income tax amount on the Group’s profit before tax differs from the statutory income tax amount that would arise using the applicable statutory income tax rate. The difference between these two amounts is reconciled below (in € 1,000):

Deferred tax assets / (liabilities) in € 1,000:

The table below details the changes in the deferred tax positions for assets and liabilities in the Statement of Financial Position (in € 1,000) :