Arla Foods Consolidated Annual Report 2021
112
Arla Foods Consolidated Annual Report 2021 / Consolidated Financial Statements / Notes
Other areas
5.1 TAX
5.2 PROVISIONS
Contents
III
The group recognises deferred tax assets, including the
value of tax losses carried forward, where management
assesses that the tax assets may be utilised in the
foreseeable future by offsetting against taxable income.
The assessment is performed on an annual basis and is
based on the budgets and business plans for future years.
The group recognised deferred tax assets in respect of
tax losses carried forward in the amount of EUR 7 million.
Temporary differences on which deferred tax assets
have not been recognised totalled EUR 32 million,
which is on a level similar to last year. Unrecognised
deferred tax assets relate to tax losses carried forward.
anD PROVISIONS
Provisions amounted to EUR 42 million in 2021,
compared to EUR 46 million last year. Provisions
primarily relate to provisions for insurance incidents
that have occurred, but have not yet been settled.
AT A Uncertainties and estimates
Provisions are particularly associated with estimates on
insurance provisions. Insurance provisions are assessed
based on historical records of, among other things,
the number of insurance events and related costs
considered. The scope and extent of onerous contracts
are also estimated.
G Accounting policies
Tax in the income statement
Tax in the income statement comprises current tax and
adjustments to deferred tax. Tax is recognised in the
income statement, except to the extent that it relates to
a business combination or items (income or costs)
recognised directly in other comprehensive income.
Current tax
Current tax is assessed based on tax legislation for
entities in the group subject to cooperative or income
taxation. Cooperative taxation is based on the capital
of the cooperative, while income tax is assessed based
on the company's taxable income for the year. Current
tax liabilities comprises the expected tax payable/
receivable on the taxable income or loss for the year,
any adjustment to the tax payable or receivable in
respect of previous years and tax paid on account.
Current tax liabilities are disclosed as part of Other
current liabilities.
Deferred tax
Deferred tax is measured in accordance with the
balance sheet liability method for all temporary
differences between the tax base of assets and liabilities
and their carrying amounts in the consolidated financial
statements. However, deferred tax is not recognised on
temporary differences on initial recognition of goodwill,
or arising at the acquisition date of an asset or liability
without affecting either the profit or loss for the year
or taxable income, except for those arising from M&A
activities.
Deferred tax is determined by applying tax rates (and
laws) that have been enacted or substantially enacted
by the end of the reporting period and that are expected
to apply when the related deferred tax asset is realised
or the deferred tax liability is settled. Changes in deferred
tax assets and liabilities due to changes in the tax rate
are recognised in the income statement except for items
recognised in other comprehensive income.
Deferred tax assets, including the value of tax losses
carried forward, are recognised under other non-current
assets at the value at which they are expected to be
used, either by elimination in the tax of future earnings or
by offsetting against deferred tax payable in companies
within the same legal tax entity or jurisdiction.
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate
to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle
on a net basis, or to realise the asset and settle the
liability simultaneously.
Uncertainties and estimates
Deferred tax
Deferred tax reflects assessments of actual future tax
due on items in the financial statements, considering
timing and probability. These estimates also reflect
expectations about future taxable profits. Actual future
taxes may deviate from these estimates due to changes
to expectations relating to future taxable income, future
statutory changes in income taxation or the outcome
of tax authorities' final review of the group's tax returns.
Recognition of a deferred tax asset also depends on an
assessment of the future use of the asset.
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Table 5.2 Provisions
(EURM)
Insurance
provisions
Restructuring
provisions
Other
provisions
Total
Total
2021
2020
2021
Provisions at 1 January
20
10
46
New provisions during the year
1
10
32
19
Used during the year
-7
-7
-14
-5
Total provisions 31 December
Non-current provisions
14
3
25
42
46
4
20
24
21
Current provisions
10
3
5
18
25
Total provisions 31 December
14
3
25
42
46
5.3 FEES TO AUDITORS APPOINTED
BY THE BOARD OF REPRESENTATIVES
FEES PAID TO EY
The fees to auditors are attributable to EY.
Table 5.3 Fees to auditors appointed by the Board of Representatives
(EURM)
2021
2020
Statutory audit
Other assurance engagements
6 3
1.6
1.5
0.3
0.2
0.4
0.6
0.5
0.4
2.8
2.7
Tax assistance
Other services
Total fees to auditorsView entire presentation