Novo Nordisk Annual Report 2021
Contents
Introducing Novo Nordisk
Strategic Aspirations
Key risks Management
Consolidated statements
Additional information
Novo Nordisk Annual Report 2021
59
Remuneration to Executive Management and Board of Directors
2.6 Income taxes and deferred income taxes
DKK million
2021
2020
2019
Income taxes expensed
Salary and short-term incentive
126
119
120
DKK million
2021
2020
Pension
12
26
26
Current tax on profit for the year
13,871
Benefits
10
10
14
Deferred tax on profit for the year
(1,528)
11,557
1,105
Long-term incentive¹
100
52
40
Tax on profit for the year
12,343
12,662
2019
11,275
(1,559)
9,716
Severance payments
29
Current tax adjustments recognised
Executive Management in total²
277
207
200
for prior years
(603)
(563)
(191)
Fee to Board of Directors²
17
17
19
Deferred tax adjustments
Total
294
224
219
recognised for prior years
(417)
(1,107)
77
Income taxes in the
1. Please refer to note 5.1 for further information.
income statement
11,323
10,992
9,602
2. Total remuneration for registered members of Executive Management amounts to
DKK 0 million (DKK 141 million in 2020 and DKK 135 million in 2019). All members of
the Board of Directors are registered.
Tax on other comprehensive
income for the year,
(income)/expense
(1,005)
577
231
Wages, salaries, social security contributions, annual leave and sick leave,
bonuses and non-monetary benefits are recognised in the year in which
the associated services are rendered by employees of Novo Nordisk. Where
Novo Nordisk provides long-term employee benefits, the costs are accrued
to match the rendering of the services by the employees concerned.
2.5 Other operating income and expenses
Computation of effective tax rate
DKK million
2021
2020
2019
Statutory corporate income tax
rate in Denmark
22.0%
22.0%
22.0%
Deviation in foreign subsidiaries'
tax rates compared to the Danish
tax rate (net)
(1.5%)
(2.5%)
(2.1%)
Non-taxable income less non-tax-
Accounting policies
Other operating income and expenses, comprises licence income and
income of a secondary nature in relation to the main activities of Novo
Nordisk. Licence income from royalties on net sales is recognised as the
underlying customers' sale occurs and from sales milestones once the
contingent sale milestone is achieved in accordance with the terms of the
relevant agreement.
Operating profit from the wholly owned subsidiary NNE A/S, not related
to Novo Nordisk's main activities, is recognised as other operating income
and expenses. Other operating income and expenses, also includes income
from the sale of intellectual property rights as well as transaction costs
incurred in connection with acquisition of businesses.
Other adjustments (net)
Effective tax rate
deductible expenses (net)
(0.3%)
(0.2%)
(1.0%)
1.4%
19.2%
20.7%
0.1%
(0.2%)
19.8%
Income taxes paid
DKK million
2021
2020
2019
Income taxes paid in Denmark for
current year
9,703
4,262
7,774
Income taxes paid outside
Denmark for current year
3,439
4,508
2,258
Income taxes paid/repayments
relating to prior years
1,296
1,336
904
Income taxes paid
14,438
10,106
10,936
The deviation in foreign subsidiaries' tax rates from the Danish tax rate is
mainly driven by Swiss business activities as well as adjustments to deferred
tax assets due to changes in local corporate tax rates. Other adjustments
consist of tax related to acquisitions and subsequent transfers of intellectual
property rights and adjustments to prior years.
In 2020, income taxes paid in Denmark and paid outside Denmark were
impacted by transfers of intellectual property rights related to acquisitions.
In 2021, the impact from acquisitions and transfer of intellectual property
rights was less significant.
Accounting policies
The tax expense for the period comprises current and deferred tax. It
also includes adjustments to previous years and changes in provisions
for uncertain tax positions. Tax is recognised in the income statement
except to the extent that it relates to items recognised in equity or other
comprehensive income. Provisions for ongoing tax disputes are included as
part of deferred tax assets, tax receivables and tax payables.
Deferred income taxes arise from temporary differences between the
accounting and tax values of the individual consolidated companies and
from realisable tax loss carry-forwards. However, deferred tax liabilities are
not recognised if they arise from the initial recognition of goodwill. Deferred
income tax is also not accounted for if it arises from initial recognition of
an asset or liability in a transaction other than a business combination that,
at the time of the transaction, affects neither accounting nor taxable profit
or loss and does not give rise to equal taxable and deductible temporary
differences. The tax value of tax loss carry-forwards is included in deferred
tax assets to the extent that these are expected to be utilised in future
taxable income. The deferred income taxes are measured according to
current tax rules and at the tax rates assumed in the year in which the
assets are expected to be utilised.
In general, the Danish tax rules related to dividends from group companies
provide exemption from tax for most repatriated profits. A provision for
withholding tax is only recognised if a concrete distribution of dividends
is planned. The unrecognised potential withholding tax amounts to
DKK 444 million (DKK 337 million in 2020).
The value of future tax deductions in relation to share programmes is
recognised as a deferred tax asset until the shares are paid out to the
employees. Any estimated excess tax deduction compared to the costs
realised in the income statement is charged to equity.View entire presentation