XML 61 R17.htm IDEA: XBRL DOCUMENT
v3.20.2

Income tax | 3 Months Ended | 12 Months Ended
--- | --- | ---
Mar. 31, 2020 | Dec. 31, 2019
Text Block [Abstract] |  |
Income tax | 12. Income tax a) Deferred income tax Deferred tax assets (DTA) and deferred tax liabilities (DTL) are comprised of the main following components:
|  | Balance Sheet |  |  | Net change in the three months period ended |
|  | March 31, 2020 |  |  | December 31, 2019 |  |  | March 31, 2020 |  |  | March 31, 2019 |
Tax losses carryforwards |  |  | 39,298 |  |  |  | 17,146 |  |  |  | 22,152 |  |  |  | (29,611 | )
Goodwill on business combinations (i) |  |  | 14,714 |  |  |  | 22,303 |  |  |  | (7,589 | ) |  |  | (9,068 | )
Provisions for IFAs’ commissions |  |  | 64,669 |  |  |  | 68,041 |  |  |  | (3,372 | ) |  |  | — |
Revaluations of financial assets at fair value |  |  | (26,370 | ) |  |  | 25,259 |  |  |  | (51,629 | ) |  |  | (2,486 | )
Expected credit losses |  |  | 13,695 |  |  |  | 5,666 |  |  |  | 8,029 |  |  |  | (75 | )
Financial instruments taxed on redemption |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 9,852 |
Profit sharing plan |  |  | 71,309 |  |  |  | 141,136 |  |  |  | (69,828 | ) |  |  | 51,494 |
Net gain on hedge instruments |  |  | 22,706 |  |  |  | (36,384 | ) |  |  | 59,091 |  |  |  | (1,080 | )
Share based plan |  |  | 14,187 |  |  |  | 2,950 |  |  |  | 11,237 |  |  |  | — |
Other provisions |  |  | 47,304 |  |  |  | 33,284 |  |  |  | 14,019 |  |  |  | 776 |
Total |  |  | 261,512 |  |  |  | 279,401 |  |  |  | (17,890 | ) |  |  | 19,802 |
Deferred tax assets |  |  | 261,512 |  |  |  | 284,533 |  |  |  |  |  |  |  |  |
Deferred tax liabilities |  |  | — |  |  |  | (5,132 | ) |  |  |  |  |  |  |  |
(i) | For tax purposes, goodwill is amortized over 5 years on a straight-line basis when the entity acquired is sold or merged into another entity.
The changes in the net deferred tax were recognized as follows:
|  | Three months period ended March 31, |
|  | 2020 |  |  | 2019 |
As of January 1 |  |  | 279,401 |  |  |  | 140,400 |
Foreign exchange variations |  |  | 21,055 |  |  |  | (114 | )
Charges to statement of income |  |  | (47,072 | ) |  |  | 18,643 |
Tax relating to components of other comprehensive income |  |  | 8,128 |  |  |  | 1,273 |
As of March 31 |  |  | 261,512 |  |  |  | 160,202 |
Unrecognized deferred taxes Deferred tax assets are recognized for tax losses to the extent that the realization of the related tax benefit against future taxable profits is probable. The Group did not recognize deferred tax assets of R$ 12,237 (December 31, 2019—R$ 18,402) mainly in respect of losses from subsidiaries overseas and that can be carried forward and used against future taxable income. A deferred tax asset was not recorded as taxable income is not expected. b) Income tax expense reconciliation The tax on the Group’s pre-tax profit differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities. The following is a reconciliation of income tax expense to profit (loss) for the year, calculated by applying the combined Brazilian statutory rates at 34% for the period ended March 31:
|  | Three months period ended March 31, |
|  | 2020 |  |  | 2019 |
Income before taxes |  |  | 516,531 |  |  |  | 303,227 |
Combined tax rate in Brazil (i) |  |  | 34 | % |  |  | 34 | %
Tax expense at the combined rate |  |  | 175,620 |  |  |  | 103,097 |
Income (loss) from entities not subject to taxation |  |  | (9,246 | ) |  |  | (48 | )
Effects from entities taxed at different rates |  |  | 14,287 |  |  |  | 6,505 |
Effects from entities taxed at different method (ii) |  |  | (64,678 | ) |  |  | (4,968 | )
Intercompany transactions with different taxation |  |  | (9,156 | ) |  |  | (7,767 | )
Tax incentives |  |  | 605 |  |  |  | — |
Non deductible expenses (non-taxable income), net |  |  | 6,586 |  |  |  | 717 |
Others |  |  | 4,959 |  |  |  | (4,747 | )
Total |  |  | 118,977 |  |  |  | 92,789 |
Effective tax rate |  |  | 23.03 | % |  |  | 30.60 | %
Current |  |  | 71,905 |  |  |  | 111,432 |
Deferred |  |  | 47,072 |  |  |  | (18,643 | )
Total expense |  |  | 118,977 |  |  |  | 92,789 |
(i) | Considering that XP Inc. is domiciled in Cayman and there is no income tax in that jurisdiction, the combined tax rate of 34% demonstrated above is the current rate applied to XP Investimentos S.A. which is the holding company of all operating entities of XP Inc. in Brazil.
(ii) | Certain eligible subsidiaries adopted the PPM tax regime and the effect of the presumed profit of subsidiaries represents the difference between the taxation based on this method and the amount that would be due based on the statutory rate applied to the taxable profit of the subsidiaries. Additionally, some entities and investment funds adopt different taxation regimes according to the applicable rules in their jurisdictions.
Other comprehensive income The tax (charge)/credit relating to components of other comprehensive income is as follows:
|  | Before tax |  |  | (Charge) / Credit |  |  | After tax |
Foreign exchange variation of investees located abroad |  |  | 1,325 |  |  |  | — |  |  |  | 1,325 |
Gains (losses) on net investment hedge |  |  | (1,277 | ) |  |  | 434 |  |  |  | (843 | )
Changes in the fair value of financial assets at fair value |  |  | (2,021 | ) |  |  | 838 |  |  |  | (1,183 | )
As of March 31, 2019 |  |  | (1,973 | ) |  |  | 1,272 |  |  |  | (701 | )
Foreign exchange variation of investees located abroad |  |  | 56,560 |  |  |  | — |  |  |  | 56,560 |
Gains (losses) on net investment hedge |  |  | (85,600 | ) |  |  | 29,104 |  |  |  | (56,496 | )
Changes in the fair value of financial assets at fair value |  |  | 52,467 |  |  |  | (20,977 | ) |  |  | 31,490 |
As of March 31, 2020 |  |  | 23,427 |  |  |  | 8,127 |  |  |  | 31,554 |
| 22. Income tax (a) Deferred income tax Deferred tax assets (DTA) and deferred tax liabilities (DTL) are comprised of the main following components:
|  | Balance Sheet |  |  | Net change in the year |
|  | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |  |  | 2017 |
Tax losses carryforwards |  |  | 17,146 |  |  |  | 55,358 |  |  |  | (38,212 | ) |  |  | 37,774 |  |  |  | 17,584 |
Goodwill on business combinations (i) |  |  | 22,303 |  |  |  | 59,993 |  |  |  | (37,690 | ) |  |  | (56,789 | ) |  |  | (51,327 | )
Provisions for IFAs’ commissions |  |  | 68,041 |  |  |  | 31,031 |  |  |  | 37,010 |  |  |  | 4,744 |  |  |  | 26,156 |
Revaluations of financial assets at fair value |  |  | 25,259 |  |  |  | 1,397 |  |  |  | 23,862 |  |  |  | (2,427 | ) |  |  | 4,030 |
Expected credit losses |  |  | 5,666 |  |  |  | 3,079 |  |  |  | 2,587 |  |  |  | (2,345 | ) |  |  | 4,329 |
Financial instruments taxed on redemption |  |  | — |  |  |  | (13,041 | ) |  |  | 13,041 |  |  |  | (6,230 | ) |  |  | (6,811 | )
Profit sharing plan |  |  | 141,136 |  |  |  | — |  |  |  | 141,136 |  |  |  | — |  |  |  | — |
Net gain on hedge instruments |  |  | (36,384 | ) |  |  | (1,441 | ) |  |  | (34,943 | ) |  |  | (51,423 | ) |  |  | 49,382 |
Share-base compensation |  |  | 2,950 |  |  |  | — |  |  |  | 2,950 |  |  |  |  |  |  |  |  |
Other provisions |  |  | 33,284 |  |  |  | 4,024 |  |  |  | 29,260 |  |  |  | (2,572 | ) |  |  | 5,251 |
Total |  |  | 279,401 |  |  |  | 140,400 |  |  |  | 139,001 |  |  |  | (79,268 | ) |  |  | 48,594 |
Deferred tax assets |  |  | 284,533 |  |  |  | 152,425 |  |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax liabilities |  |  | (5,132 | ) |  |  | (12,025 | ) |  |  |  |  |  |  |  |  |  |  |  |
(i) | For tax purposes, goodwill is amortized over 5 years on a straight-line basis when the entity acquired is sold or merged into another entity.
The changes in the net deferred tax were recognized as follows:
|  | 2019 |  |  | 2018 |  |  | 2017 |
At January 1 |  |  | 140,400 |  |  |  | 219,668 |  |  |  | 171,074 |
Foreign exchange variations |  |  | (3,461 | ) |  |  | (9,259 | ) |  |  | (1,155 | )
Business combination (Note 5 (ii)) |  |  | — |  |  |  | — |  |  |  | 3,751 |
Charges to statement of income |  |  | 139,411 |  |  |  | (76,455 | ) |  |  | 45,325 |
Tax relating to components of other comprehensive income |  |  | 3,051 |  |  |  | 6,446 |  |  |  | 673 |
At December 31 |  |  | 279,401 |  |  |  | 140,400 |  |  |  | 219,668 |
Unrecognized deferred taxes Deferred tax assets are recognized for tax losses to the extent that the realization of the related tax benefit against future taxable profits is probable. The Group did not recognize deferred tax assets of R$ 18,402 (2018—R$ 12,025) mainly in respect of losses from subsidiaries overseas and that can be carried forward and used against future taxable income. (b) Income tax expense reconciliation The tax on the Group’s pre-tax profit differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities. The following is a reconciliation of income tax expense to profit (loss) for the year, calculated by applying the combined Brazilian statutory rates at 34% for the year ended December 31:
|  | 2019 |  |  | 2018 |  |  | 2017 |
Income before taxes |  |  | 1,544,109 |  |  |  | 640,728 |  |  |  | 575,507 |
Combined tax rate in Brazil (a) |  |  | 34,00 | % |  |  | 34,00 | % |  |  | 34,00 | %
Tax expense at the combined rate |  |  | 524,997 |  |  |  | 217,848 |  |  |  | 195,672 |
Income from entities not subject to taxation |  |  | (9,551 | ) |  |  | (3,647 | ) |  |  | (5,101 | )
Effects from entities taxed at different rates |  |  | 25,948 |  |  |  | 16,444 |  |  |  | 9,078 |
Effects from entities taxed at different method (b) |  |  | (24,089 | ) |  |  | (18,183 | ) |  |  | (25,971 | )
Intercompany transactions with different taxation |  |  | (50,138 | ) |  |  | (38,255 | ) |  |  | (30,264 | )
Tax incentives |  |  | (9,772 | ) |  |  | (1,408 | ) |  |  | (265 | )
Non-deductible expenses (non-taxable income) |  |  | 10,888 |  |  |  | (689 | ) |  |  | 175 |
Others |  |  | (13,658 | ) |  |  | 3,288 |  |  |  | 8,642 |
Total |  |  | 454,625 |  |  |  | 175,398 |  |  |  | 151,966 |
Effective tax rate |  |  | 29,44 | % |  |  | 27,20 | % |  |  | 26,38 | %
Current |  |  | 594,037 |  |  |  | 98,943 |  |  |  | 197,291 |
Deferred |  |  | (139,412 | ) |  |  | 76,455 |  |  |  | (45,325 | )
Total expense |  |  | 454,625 |  |  |  | 175,398 |  |  |  | 151,966 |
(a) | Considering that XP Inc. is domiciled in Cayman and there is no income tax in that jurisdiction, the combined tax rate of 34% demonstrated above is the current rate applied to XP Investimentos S.A. which is the holding company of all operanting entities of XP Inc. in Brazil.
(b) | Certain eligible subsidiaries adopted the PPM tax regime and the effect of the presumed profit of subsidiaries represents the difference between the taxation based on this method and the amount that would be due based on the statutory rate applied to the taxable profit of the subsidiaries.
Other comprehensive income The tax (charge)/credit relating to components of other comprehensive income is as follows:
|  | Before tax |  |  | (Charge) / Credit |  |  | After tax |
Foreign exchange variation of investees located abroad |  |  | 2,034 |  |  |  | — |  |  |  | 2,034 |
Gains (losses) on net investment hedge |  |  | (3,124 | ) |  |  | 738 |  |  |  | (2,386 | )
Changes in the fair value of financial assets at fair value |  |  | 275 |  |  |  | (65 | ) |  |  | 210 |
As of December 31, 2017 |  |  | (815 | ) |  |  | 673 |  |  |  | (142 | )
Foreign exchange variation of investees located abroad |  |  | 18,645 |  |  |  | — |  |  |  | 18,645 |
Gains (losses) on net investment hedge |  |  | (26,508 | ) |  |  | 9,013 |  |  |  | (17,495 | )
Changes in the fair value of financial assets at fair value |  |  | 6,727 |  |  |  | (2,567 | ) |  |  | 4,160 |
As of December 31, 2018 |  |  | (1,136 | ) |  |  | 6,446 |  |  |  | 5,310 |
Foreign exchange variation of investees located abroad |  |  | 6,823 |  |  |  | — |  |  |  | 6,823 |
Gains (losses) on net investment hedge |  |  | (10,543 | ) |  |  | 3,410 |  |  |  | (7,133 | )
Changes in the fair value of financial assets at fair value |  |  | 1,058 |  |  |  | (360 | ) |  |  | 698 |
As of December 31, 2019 |  |  | (2,662 | ) |  |  | 3,050 |  |  |  | 388 |

X
- Definition The entire disclosure for income taxes. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Name IAS -Number 12 -IssueDate 2019-01-01 -Section Disclosure -URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IAS&num=12&code=ifrs-tx-2019-en-r&doctype=Standard&dita_xref=IAS12_g79-88_TI -URIDate 2019-03-27 + Details
Name: | ifrs-full_DisclosureOfIncomeTaxExplanatory
Namespace Prefix: | ifrs-full_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Definition Text Block [Abstract] + References No definition available. + Details
Name: | xp_TextBlockAbstract
Namespace Prefix: | xp_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration