Note 17 Deferred tax

The deferred tax item is made up as follows:

Deferred tax assets

This €158 million item comprises the temporary 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.

The deferred tax assets of €155 million in respect of property, plant and equipment (2019: €161 million) are the result of differences between the carrying amounts in the financial statements and the tax bases. Alliander became liable to pay corporate income tax on 1 January 1998. 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 ‘Property, plant and equipment’ deferred tax item refers to the general overhead surcharge that has been capitalised for tax purposes, the effects of implementing IFRS accounting policies in 2005, the arbitrary amortisation tax break allowed in the past and a lower tax valuation of the assets of two Dutch subsidiaries.

The other portion of the deferred tax asset of €3 million consists of the differences in valuation of provisions and other securities and investments for commercial purposes and for tax purposes.

As at year-end 2020, there was a total unrecognised deferred tax asset of €24 million (year-end 2019: €21 million), made up of:

• tax loss carryforwards from our activities in Germany: €17 million (2019: €17 million), which, in connection with the projected results in the medium term for the German entities, have not been recognised, apart from the losses reported by the entity 450connect GmbH;

• temporary measurement differences totalling €5 million (2019: €2 million) at one of the German entities;

• an amount of €2 million (2019: €2 million) relating to a Dutch subsidiary acquired in 2018.

Gross movement in deferred tax assets

The decrease in the deferred tax assets by €7 million in 2020 consists of a realisation of the temporary differences, including due to the change in the corporate income tax rate, and a movement relating to the differences in valuation with regard to the acquisition of two Dutch subsidiaries. The realisation of the temporary differences included in the income statement result in an expense of €17 million. Given that the announced rate change from 25% to 21.7% that was to take effect in 2021 has not materialised, the correction included in the past has lapsed. The effect is an increase of €19 million in the deferred tax asset and a gain in the income statement. In 2020, the shares of two Dutch companies were acquired; the companies were included in the consolidation and deferred taxes were valued. The valuation for commercial purposes is higher than for tax purposes. The effect is a decrease of €9 million in the deferred tax asset.

Deferred tax liabilities

The deferred tax liabilities as at year-end 2020 stood at €1 million (year-end 2019: €3 million).