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European Insurance and Occupational Pensions Authority

704

Q&A

Question ID: 704

Regulation Reference: Guidelines on recognition and valuation of assets and liabilities other than technical provisions

Article: 15

Status: Final

Date of submission: 19 May 2016

Question

Topic: "Treatment of deferred taxes derived from goodwill and certain intangible, which are valued at Zero for the Solvency II balance sheet."

Question:" Should deferred taxes derived from goodwill and certain intangible, which are valued at Zero for the Solvency II balance sheet, be recognized in the Solvency II balance sheet and should a possible risk mitigation effect from this kind of deferred taxes be considered?"

EIOPA answer

IAS 12 Income Taxes requires setting up deferred tax assets or liabilities for temporary differences between the carrying amount of an asset or liability in the financial statement [here: the SII balance sheet] and its tax base. Intangible assets that are recognised and valued (with a value other than zero) in the tax balance sheet (i.e. the tax base is not nil), would lead to deferred tax assets (subject to the conditions set out in Art. 15 of the Delegated Regulation) in case of deductible differences, which means that a difference actually impacts the taxable profit and the eventual tax payment. IAS 12, paragraph 32A specifies that treatment for goodwill.