Note 17 Deferred tax

The deferred tax item is made up as follows:

Deferred tax assets

This item is made up of the differences between the reported carrying amounts of the items of property, plant and equipment and other balance sheet items , including investments and provisions, and the corresponding tax bases.

Gross movement in deferred tax assets

The deferred tax assets of €213 million in respect of property, plant and equipment (2016: €227 million) are the result of differences between the carrying amounts in the financial statements and the tax bases. Alliander became liable to corporate income tax on 1 January 1998 and the item of deferred tax arose on that date. The carrying amounts of the property, plant and equipment agreed with the Dutch Tax & Customs Administration as at 1 January 1998 have depreciation periods extending ahead as far as 2030. Realisation of the temporary difference relating to these assets is therefore spread out over this period. In addition, the item Property, plant and equipment deferred tax refers to the general overhead surcharge that has been capitalised for tax purposes, the effects of implementing IFRS accounting policies in 2005 and the arbitrary amortisation tax break allowed in the past.

The decrease of €11 million in the amount of the deferred tax assets in 2017 has largely been recognised in the income statement (€14 million loss) and is partly accounted for by movements recognised directly in equity (€3 million gain).

The deferred tax liabilities as at year-end 2017 stood at €5 million (year-end 2016: €5 million). This item is accounted for by the net effect of tax loss carryforwards of the 450connect GmbH tax group (deferred tax asset of €3 million) and the difference between the reported carrying amount of licences and their corresponding tax base (deferred tax liability of €8 million). The tax loss carryforwards increased by €1 million in 2017, owing to recognition of the 2017 loss, but at the same time there was a decrease of €1 million, owing to a change in the recognition of losses in the period prior to year-end 2013.

There were no changes in the rates of corporate income tax in 2017. As at year-end 2017, there was an unrecognised deferred tax asset of €19 million. This relates to tax loss carryforwards from our activities in Germany and Belgium which in connection with the projected results in the medium term for the German and Belgian entities have not been recognised, apart from the losses reported by our entity 450connect GmbH.