09 | income tax expense

2015

2014

Current taxes

21,493

18,498

Deferred taxes

3,880

11,003

CHARGE IN FINANCIAL STATEMENT FROM CONTINUING OPERATIONS

25,373

29,501

Taxation on group profit before taxes differs as disclosed below from the charge as calculated using the weighted average standard tax rate for the group:

2015

2015 %

2014

2014 %

Income before tax

45,901

57,615

Taxation based on weighted average tax rates

15,991

34.8%

20,834

36.2%

Non tax-deductible costs

6,674

14.5%

4,454

7.7%

Tax-deductible tax on added value

-2,670

-5.8%

-2,502

-4.3%

Tax-exempt revenue

-9,251

-20.1%

-11,602

-20.1%

Additional unrecognised losses

14,629

31.9%

14,545

25.2%

Unrecognised temporary differences

-

-

1,964

3.4%

Reassessed income tax charge from previous years

-1,425

-3.1%

-623

-1.1%

Tax on added value

7,044

15.3%

6,595

11.4%

Settlement of loss on subsidiary

-5,619

-12.2%

-4,164

-7.2%

CHARGE IN FINANCIAL STATEMENT FROM CONTINUING OPERATIONS

25,373

55.3%

29,501

51.2%

The weighted average nominal tax rate was 34.8% (2014: 36.2%). This rate is composed of the results of subsidiaries in the various countries.

In France a tax is charged on added value which is recognised as income tax. This tax is deductible for the calculation of the result for tax purposes and is recognised in the above table as tax-deductible tax on added value. Tax-exempt revenue mainly relates to the notional interest allowance in Belgium and the CICE tax measure in France. The item additional unrecognised losses mainly relate to the impairment of deferred tax assets in France, Germany and Austria. In the Netherlands and Belgium deferred tax assets are recognised with respect to the settlement of losses on subsidiaries on future results for tax purposes.

Deferred tax assets and liabilities are specified according to maturity as disclosed below:

2015

2014

Deferred tax assets:

- Deferred tax asset recoverable after 12 months

31,762

41,593

- Deferred tax asset recoverable within 12 months

13,424

8,284

45,186

49,877

Deferred income tax liabilities:

- Deferred tax liability recoverable after 12 months

5,634

5,233

- Deferred tax liability recoverable within 12 months

1,021

2,100

6,655

7,333

NET DEFERRED ASSET

38,531

42,544

Changes in deferred income taxes are as disclosed below:

CHANGE IN DEFERRED TAXES

2015

2014

Balance as at 1 January

42,544

54,760

To income statement as continuing operations

-3,880

-11,003

To income statement as discontinued operations

-

341

Remeasurement of pension liability in comprehensive income

-47

-120

Cash flow hedge in comprehensive income

-34

107

Acquisition of subsidiaries

-52

-1,541

BALANCE AS AT 31 DECEMBER

38,531

42,544

Deferred tax assets consist of:

DEFERRED TAX ASSETS

2015

2014

Tax losses carried forward

31,040

38,622

Other temporary differences

14,146

11,255

BALANCE AS AT 31 DECEMBER

45,186

49,877

The tax losses carried forward relates to Germany, Belgium and the Netherlands. The other temporary differences include € 7,289 for tax losses relating to subsidiaries (2014: € 4,164), € 2,319 for software depreciation (2014: € 1,082), € 1,050 for tax-deductible goodwill (2014: € 1,125) and € 2,449 for restructuring provisions (2014: € 3,876).

Based on earnings forecasts for the coming years, the Executive Board has made an estimation of the probability of these assets being used in the coming years, taking into account country-specific recoverability possibilities. The forecasts are in line with the assumptions used in the impairment test (note 11), supplemented with specific elements for the determination of the result for tax purposes.

In the event the intended public offer announced by Recruit Holdings Co., Ltd. is declared unconditional, the settlement of the tax losses would most likely no longer be permitted under tax legislation in Germany unless certain conditions are met. At the end of 2015 the respective losses, in accordance with IAS 12, were valued at an amount of € 16.6 million and an amount of € 18.7 million was not valued.

Deferred tax liabilities consist of:

DEFERRED TAX LIABILITIES

2015

2014

Intangible assets

5,965

6,700

Other temporary differences

690

633

BALANCE AS AT 31 DECEMBER

6,655

7,333

The other temporary differences in the deferred tax liabilities include capitalised costs of the syndicated credit facility.

Changes in unrecognised deferred tax assets resulting from losses carried forward are as disclosed below:

UNRECOGNISED DEFERRED TAX ASSETS

2015

2014

Balance as at 1 January

33,457

18,912

Additional unrecognised deferred tax assets

14,629

14,545

Permanently unrecognisable losses

-2,187

-

BALANCE AS AT 31 DECEMBER

45,899

33,457

Additional taxes on unrecognised losses comprises losses that are not expected to be offset in the foreseeable future (ten years). Of these unrecognised losses, an amount of € 39,283 (2014: € 28,020) has an unlimited settlement period with future taxable profits.

The measurement of deferred taxes is based on growth and profitability assumptions which may differ from actual results. A 10% deviation from the revenue projections for 2016 and therefore also for revenue in the years that follow can result in a € 1.2 million decrease or a € 1.2 million increase in deferred tax assets. A 0.5% decrease or increase in projections for EBITA as a percentage of revenue can result in a € 1.2 million decrease or a € 2.6 million increase in deferred tax assets.