Investor Presentaiton
Novo Nordisk Annual Report 2023
Remuneration to Executive Management and Board of Directors
Introducing Novo Nordisk
Strategic Aspirations
Risks
Management
Consolidated statements
Additional information
2.6 Income taxes and deferred income taxes
The deviation in foreign subsidiaries' tax rates from the Danish tax rate is mainly
driven by Swiss and US business activities. Other adjustments consist of tax related
to acquisitions and adjustments to prior years.
From 1 January 2024 Novo Nordisk will be subject to Global Minimum Tax (OECD BEPS
Pillar 2 rules). The rules are not expected to have a material impact on the tax position
of Novo Nordisk in 2024.
59
59
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. 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. In some countries withholding tax
will be applied to dividends paid to Denmark. A provision for withholding tax is only
recognised if a concrete distribution of dividends is planned. The unrecognised
potential withholding tax amounts to DKK 1,026 million (DKK 567 million in 2022).
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.
DKK million
Salary and short-term incentive
Pension
2023
2022
2021
Income taxes expensed
173
141
126
DKK million
2023
2022
2021
17
13
12
Current tax on profit for the year
25,918
17,829
13,871
Benefits
19
9
10
Deferred tax on profit for the year
(4,464)
(3,806)
(1,528)
Long-term incentive¹
Severance payments
Executive Management in total²
Fees to Board of Directors³
Total
121
97
100
Tax on profit for the year
21,454
14,023
12,343
29
330
260
277
Current tax adjustments recognised
for prior years
(916)
339
(603)
22
20
17
352
280
294
Deferred tax adjustments recognised
for prior years
453
1. Refer to note 5.1 for further information on share-based payment schemes. 2. Total remuneration for
persons registered as members of Executive Management with the Danish Business Authority amounts to
DKK 195 million (DKK 175 million in 2022 and DKK 202 million in 2021). 3. All members of the Board of Directors
are registered with the Danish Business Authority.
Income taxes in the income statement
20,991
(825)
13,537
(417)
11,323
Tax on other comprehensive income
for the year, (income)/expense
359
889
(1,005)
ACCOUNTING POLICIES
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
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.
Computation of effective tax rate
DKK million
2023
2022
2021
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)
(0.9%)
(1.1%)
(1.5%)
Non-taxable income less non-tax-
deductible expenses (net)
(0.7%)
Other adjustments (net)
(0.3%)
Effective tax rate
20.1%
(0.5%) (0.3%)
(0.8%) (1.0%)
19.6% 19.2%
Income taxes paid
DKK million
2023
2022
2021
Income taxes paid in Denmark for
current year
16,242
9,181
9,703
Income taxes paid outside Denmark
for current year
8,906
5,647
3,439
Income taxes paid/(repayments) relating
to prior years
749
(313)
1,296
Income taxes paid
25,897
14,515
14,438View entire presentation