19. Tax assets and liabilities
19.1 Consolidated tax group
Pursuant to current legislation, the BBVA Consolidated Tax Group includes the Bank (as the parent company) and its Spanish subsidiaries that meet the requirements provided for under Spanish legislation regulating the taxation regime for the consolidated profit of corporate groups.
The Group’s non-Spanish other banks and subsidiaries file tax returns in accordance with the tax legislation in force in each country.
19.2 Years open for review by the tax authorities
The years open to review in the BBVA Consolidated Tax Group as of December 31, 2015 are 2010 and subsequent years for the main taxes applicable.
The remainders of the Spanish consolidated entities in general have the last four years open for inspection by the tax authorities for the main taxes applicable, except for those in which there has been an interruption of the limitation period due to the start of an inspection.
In the year 2014 as a consequence of the tax authorities examination reviews, inspections were initiated until the year 2009 inclusive, all of them signed in acceptance during the year 2014.
In view of the varying interpretations that can be made of some applicable tax legislation, the outcome of the tax inspections of the open years that could be conducted by the tax authorities in the future could give rise to contingent tax liabilities which cannot be reasonably estimated at the present time. However, the Group considers that the possibility of these contingent liabilities becoming actual liabilities is remote and, in any case, the tax charge which might arise therefore would not materially affect the Group’s accompanying consolidated financial statements.
19.3 Reconciliation
The reconciliation of the Group’s corporate income tax expense resulting from the application of the Spanish corporation income tax rate and the income tax expense recognized in the accompanying consolidated income statements is as follows:
Download ExcelReconciliation of Taxation at the Spanish Corporation Tax Rate to the Tax Expense Recorded for the Period | Millions of euros | |||||
---|---|---|---|---|---|---|
2015 | 2014 | 2013 | ||||
Amount | Effective Tax % |
Amount | Effective Tax % |
Amount | Effective Tax % |
|
Consolidated profit before tax | 4,603 |
|
3,980 |
|
2,864 |
|
From continuing operations | 4,603 |
|
3,980 |
|
954 |
|
From discontinued operations | - |
|
- |
|
1,910 |
|
Taxation at Spanish corporation tax rate 30% | 1,381 | 30.00% | 1,194 | 30.00% | 859 | 30.00% |
Lower effective tax rate from our foreign entities (*) | (221) |
|
(318) |
|
(498) |
|
Mexico | (149) | 24.65% | (145) | 24.27% | (301) | 19.53% |
Chile | (28) | 17.83% | (71) | (8.36)% | (23) | 23.00% |
Colombia | 2 | 30.42% | 2 | 30.41% | (20) | 25.06% |
Peru | (13) | 27.63% | (12) | 27.59% | (59) | 20.74% |
Others | (33) | - | (76) |
|
33 |
|
Revenues with lower tax rate (dividends) | (65) |
|
(88) |
|
(50) |
|
Equity accounted earnings | (74) |
|
(147) |
|
(211) |
|
Other effects | 253 |
|
257 |
|
(73) |
|
Current income tax | 1,274 |
|
898 |
|
27 |
|
Of which: |
|
|
|
|
|
|
Continuing operations | 1,274 |
|
898 |
|
(16) |
|
Discontinued operations | - |
|
- |
|
43 |
|
The effective income tax rate for the Group in the years ended December 31, 2015, 2014 and 2013 is as follows:
Download Excel
|
Millions of euros | ||
---|---|---|---|
Effective Tax Rate | 2015 | 2014 | 2013 |
Income from: |
|
|
|
Consolidated Tax Group | (1,426) | (997) | (3,115) |
Other Spanish Entities | 107 | 18 | (13) |
Foreign Entities | 5,922 | 4,959 | 5,992 |
Total | 4,603 | 3,980 | 2,864 |
Income tax and other taxes | 1,274 | 898 | 27 |
Effective Tax Rate | 27.68% | 22.56% | 0.94% |
19.4 Income tax recognized in equity
In addition to the income tax expense recognized in the accompanying consolidated income statements, the Group has recognized the following income tax charges for these items in the consolidated total equity:
Download Excel
|
Millions of euros | ||
---|---|---|---|
Tax recognized in total equity | 2015 | 2014 | 2013 |
Charges to total equity |
|
|
|
Debt securities | (593) | (953) | (223) |
Equity instruments | 113 | (188) | (9) |
Subtotal | (480) | (1,141) | (232) |
Total | (480) | (1,141) | (232) |
19.5 Deferred taxes
The balance under the heading "Tax assets" in the accompanying consolidated balance sheets includes deferred tax assets. The balance under the “Tax liabilities” heading includes to the Group’s various deferred tax liabilities. The details of the most important tax assets and liabilities are as follows:
Download ExcelTax assets and liabilities | Millions of euros | ||
---|---|---|---|
2015 | 2014 | 2013 | |
Tax assets- |
|
|
|
Current | 1,901 | 2,035 | 2,502 |
Deferred | 15,878 | 10,391 | 9,202 |
Pensions | 1,022 | 902 | 750 |
Portfolio | 1,474 | 920 | 1,138 |
Other assets (investments in subsidiaries) | 554 | 535 | 456 |
Impairment losses | 1,346 | 1,041 | 790 |
Other | 981 | 905 | 512 |
Secured tax assets (*) | 9,536 | 4,881 | 4,373 |
Tax losses | 965 | 1,207 | 1,183 |
Total | 17,779 | 12,426 | 11,704 |
Tax Liabilities- |
|
|
|
Current | 1,238 | 980 | 993 |
Deferred | 3,483 | 3,177 | 1,537 |
Portfolio | 1,907 | 2,096 | 925 |
Charge for income tax and other taxes | 1,576 | 1,081 | 612 |
Total | 4,721 | 4,157 | 2,530 |
With respect to the changes in assets and liabilities due to deferred tax contained in the above table, the following should be pointed out:
- The increase in guaranteed tax assets is mainly the result of the integration in 2015 of the Catalunya Banc Group for €4,097 million, as well as the generation of a higher amount over the year through the application of the tax code in force.
- The increase in assets due to deferred tax other than guaranteed tax assets is due mainly to the consolidation and registration of fair value adjustments in the Garanti business combinations for €503 million.
- The reduction in tax losses is mainly the result of offsetting in 2015 the negative tax bases and deductions pending application generated in previous years for €206 million.
- The increase in liabilities due to deferred tax other is due mainly to the consolidation and registration of fair value adjustments in the Garanti business combinations €355 million.
Of the assets and liabilities due to deferred tax contained in the above table, those included in section 21.4 above have been recognized against the entity's equity, and the rest against earnings for the year
As of December 31, 2015, 2014 and 2013, the estimated amount of temporary differences associated with investments in foreign subsidiaries, branches and associates and investments in joint venture entities, for which no deferred tax liabilities have been recognized in the accompanying consolidated balance sheets, were €656 million, €497 million and €297 million, respectively
Of the deferred tax assets contained in the above table, the detail of the items and amounts guaranteed by the Spanish and Portuguese governments, broken down by the items that originated those assets is as follows:
Download ExcelSecured tax assets | Millions of euros | ||
---|---|---|---|
2015 | 2014 | 2013 | |
Pensions | 1,904 | 1,741 | 1,565 |
Impairment losses | 7,632 | 3,140 | 2,808 |
Total | 9,536 | 4,881 | 4,373 |
As of December 31, 2015, non-guaranteed net deferred tax assets of the above table amounted to €2,859 million (€2,333 million as of December 31, 2014 and €3,292 million as of December 31, 2013), which broken down by major geographies is as follows:
- Spain: Net deferred tax assets recognized in Spain totaled €1,437 million as of December 31, 2015 (€1,383 million as of December 31, 2014 and €2,322 million as of December 31, 2013). €959 million of the figure recorded in the year ended December 31, 2015 for net deferred tax assets related to tax credits and tax loss carry forwards and €478 million relate to temporary differences.
- Mexico: Net deferred tax assets recognized in Mexico amounted to €608 million as of December 31, 2015 (€399 million as of December 31, 2014 and €402 million as of December 31, 2013). 99,96 % of deferred tax assets as of December 31, 2015 relate to temporary differences. The remainders are tax credits carry forwards.
- South America: Net deferred tax assets recognized in South America amounted to €330 million as of December 31, 2015 (€364 million as of December 31, 2014 and €379 million as of December 31, 2013). All the deferred tax assets relate to temporary differences.
- United States: Net deferred tax assets recognized in the United States amounted to €300 million as of December 31, 2015 (€160 million as of December 31, 2014 and €130 million as of December 31, 2013). All the deferred tax assets relate to temporary differences.
- Turkey: Net deferred tax assets recognized in Turkey amounted to €152 million as of December 31, 2015. As of December 31, 2015, all the deferred tax assets correspond to €5 million of tax credits related to tax losses carry forwards and deductions and €147 million relate to temporary differences.
Based on the information available as of December 31, 2015, including historical levels of benefits and projected results available to the Bank for the coming years, it is considered that sufficient taxable income will be generated for the recovery of above mentioned unsecured deferred tax assets when they become deductible according to the tax laws.