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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 14,438
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