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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Liberty Global files its primary income tax return in the U.K. Its subsidiaries file income tax returns in the U.S., the U.K. and a number of other European jurisdictions. The income taxes of Liberty Global and its subsidiaries are presented on a separate return basis for each tax-paying entity or group. The components of our earnings (loss) from continuing operations before income taxes are as follows:
| Year ended December 31,
| 2019 |  | 2018 |  | 2017
| in millions
U.K. | $ | (831.0 | ) |  | $ | 330.9 |  |  | $ | (991.3 | )
The Netherlands | (662.8 | ) | — |  | (321.1 | ) | — |  | (26.1 | )
Belgium | 409.3 |  |  | 392.4 |  |  | 140.0 |
Switzerland | 178.5 |  |  | 318.8 |  |  | 111.6 |
U.S. | (7.0 | ) |  | (51.6 | ) |  | (842.5 | )
Intercompany activity with discontinued operations | (237.2 | ) |  | (426.4 | ) |  | (499.9 | )
Other | (5.8 | ) |  | (81.2 | ) |  | (2.9 | )
Total | $ | (1,156.0 | ) |  | $ | 161.8 |  |  | $ | (2,111.1 | )
Income tax expense consists of:
| Current |  | Deferred |  | Total
| in millions
Year ended December 31, 2019: |  |  |  |  |
The Netherlands | $ | — |  |  | $ | (275.3 | ) |  | $ | (275.3 | )
Belgium | (134.7 | ) |  | 3.6 |  |  | (131.1 | )
U.K. | (1.5 | ) |  | 118.8 |  |  | 117.3 |
U.S. (a) | (4.1 | ) |  | 81.9 |  |  | 77.8 |
Switzerland | (27.8 | ) |  | (1.1 | ) |  | (28.9 | )
Other | (19.4 | ) |  | 6.6 |  |  | (12.8 | )
Total | $ | (187.5 | ) |  | $ | (65.5 | ) |  | $ | (253.0 | )
Year ended December 31, 2018: |  |  |  |  |
U.S. (a) | $ | (957.5 | ) |  | $ | 7.6 |  |  | $ | (949.9 | )
The Netherlands | 14.2 |  |  | (519.4 | ) |  | (505.2 | )
Belgium | (153.9 | ) |  | 41.6 |  |  | (112.3 | )
U.K | (7.2 | ) |  | 32.2 |  |  | 25.0 |
Switzerland | (16.6 | ) |  | 6.2 |  |  | (10.4 | )
Other | (14.2 | ) |  | (6.3 | ) |  | (20.5 | )
Total | $ | (1,135.2 | ) |  | $ | (438.1 | ) |  | $ | (1,573.3 | )
Year ended December 31, 2017: |  |  |  |  |
The Netherlands | $ | (16.2 | ) |  | $ | (118.2 | ) |  | $ | (134.4 | )
U.K | (3.3 | ) |  | (64.7 | ) |  | (68.0 | )
Belgium | (203.6 | ) |  | 145.4 |  |  | (58.2 | )
U.S. (a) | 47.2 |  |  | (32.8 | ) |  | 14.4 |
Switzerland | (2.0 | ) |  | 15.6 |  |  | 13.6 |
Other | (14.4 | ) |  | 8.1 |  |  | (6.3 | )
Total | $ | (192.3 | ) |  | $ | (46.6 | ) |  | $ | (238.9 | )
_______________
(a) | Includes federal and state income taxes. Our U.S. state income taxes were not material during any of the years presented.
Income tax expense attributable to our earnings (loss) from continuing operations before income taxes differs from the amounts computed using the applicable income tax rate as a result of the following factors:
| Year ended December 31,
| 2019 |  | 2018 |  | 2017
| in millions
Computed “expected” tax benefit (expense) (a) | $ | 219.6 |  |  | $ | (30.7 | ) |  | $ | 406.4 |
Non-deductible or non-taxable interest and other expenses | (191.7 | ) |  | (153.8 | ) |  | (42.8 | )
Basis and other differences in the treatment of items associated with investments in subsidiaries and affiliates (b) | (167.9 | ) |  | (360.1 | ) |  | (192.6 | )
Change in valuation allowances | (113.6 | ) |  | (34.9 | ) |  | (341.6 | )
Non-deductible or non-taxable foreign currency exchange results | (26.5 | ) |  | 132.5 |  |  | (233.8 | )
Enacted tax law and rate changes (c) | 19.2 |  |  | (13.5 | ) |  | 7.4 |
International rate differences (d) | 8.5 |  |  | (3.5 | ) |  | 126.9 |
Recognition of previously unrecognized tax benefits | 5.9 |  |  | 49.6 |  |  | 4.9 |
Mandatory Repatriation Tax (e) | — |  |  | (1,137.2 | ) |  | — |
Tax benefit associated with technologies innovation | — |  |  | — |  |  | 12.1 |
Other, net | (6.5 | ) |  | (21.7 | ) |  | 14.2 |
Total income tax expense | $ | (253.0 | ) |  | $ | (1,573.3 | ) |  | $ | (238.9 | )
_______________
(a) | The statutory or “expected” tax rates are the U.K. rates of 19.0% for 2019, 19.0% for 2018 and 19.25% for 2017. The 2017 statutory rate represents the blended rate that was in effect for the year ended December 31, 2017 based on the 20.0% statutory rate that was in effect for the first quarter of 2017 and the 19.0% statutory rate that was in effect for the remainder of 2017.
(b) | These amounts reflect the net impact of differences in the treatment of income and loss items between financial reporting and tax accounting related to investments in subsidiaries and affiliates including the effects of foreign earnings.
(c) | On December 27, 2019, updated legislation was enacted in the Netherlands to delay and lessen the corporate income tax rate reduction that had previously been enacted in December 2018. The current rate of 25% will now be maintained in 2020 and will be reduced to 21.7% in 2021; the previous reduction schedule reduced from the current rate of 25.0% to 22.5% in 2020 and 20.5% in 2021. Substantially all of the impacts of the new rate change in the Netherlands on our deferred tax balances were recorded during the fourth quarter of 2019, modifying the impacts of the 2018 rate change that were previously recorded during the fourth quarter of 2018. In 2017, a Belgian income tax rate reduction was signed into law. The Belgian statutory tax rate decreased from 33.9% to 29.58% beginning in 2018, and in 2020, this rate will further decrease to 25.0%. Also in 2017, the U.S. corporate income tax rate was reduced from 35.0% to 21.0% effective beginning in 2018. Substantially all of the impacts of the tax rate changes in Belgium and the U.S. on our deferred tax balances were recorded during the fourth quarter of 2017.
(d) | Amounts reflect adjustments (either a benefit or expense) to the “expected” tax benefit (expense) for statutory rates in jurisdictions in which we operate outside of the U.K.
(e) | As further discussed below, the liability we have recorded for the Mandatory Repatriation Tax (as defined and described below) is significantly lower than the amount included in our income tax expense due in part to the expected use of carryforward attributes in the U.S., all of which were subject to valuation allowances prior to the initial recognition of the Mandatory Repatriation Tax during the first quarter of 2018.
The components of our net deferred tax assets are as follows:
| December 31,
| 2019 |  | 2018
| in millions
Deferred tax assets | $ | 2,457.4 |  |  | $ | 2,488.2 |
Deferred tax liabilities (a) | (246.4 | ) |  | (232.9 | )
Net deferred tax asset | $ | 2,211.0 |  |  | $ | 2,255.3 |
_______________
(a) | Our deferred tax liabilities are included in other long-term liabilities on our consolidated balance sheets.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:
| December 31,
| 2019 |  | 2018
| in millions
Deferred tax assets: |  |  |
Net operating loss and other carryforwards | $ | 4,367.5 |  |  | $ | 4,289.8 |
Property and equipment, net | 1,969.0 |  |  | 1,923.4 |
Debt | 231.5 |  |  | 317.3 |
Investments | 136.4 |  |  | 156.2 |
Derivative instruments | 113.3 |  |  | 72.5 |
Share-based compensation | 76.5 |  |  | 79.5 |
Leases | 58.5 |  |  | 5.6 |
Other future deductible amounts | 132.3 |  |  | 176.1 |
Deferred tax assets | 7,085.0 |  |  | 7,020.4 |
Valuation allowance | (4,235.5 | ) |  | (4,094.7 | )
Deferred tax assets, net of valuation allowance | 2,849.5 |  |  | 2,925.7 |
Deferred tax liabilities: |  |  |
Property and equipment, net | (169.9 | ) |  | (167.4 | )
Deferred revenue | (168.1 | ) |  | (178.9 | )
Intangible assets | (114.1 | ) |  | (193.8 | )
Debt | (65.7 | ) |  | (91.0 | )
Right of use assets | (56.8 | ) |  | — |
Other future taxable amounts | (63.9 | ) |  | (39.3 | )
Deferred tax liabilities | (638.5 | ) |  | (670.4 | )
Net deferred tax asset | $ | 2,211.0 |  |  | $ | 2,255.3 |
Our deferred income tax valuation allowance increased $140.8 million in 2019. This increase reflects the net effect of (i) net tax expense of $113.6 million, (ii) an increase in deferred tax assets, (iii) foreign currency translation adjustments, (iv) the effect of enacted tax law and rate changes, (v) expiration of net operating losses and (vi) other individually insignificant items. Virgin Media had property and equipment on which future U.K. tax deductions can be claimed of $18.4 billion and $18.1 billion at December 31, 2019 and 2018, respectively. The maximum amount of these “capital allowances” that can be claimed in any one year is approximately 18% of the remaining balance, after additions, disposals and prior claims. The tax effects of the excess of these capital allowances over the related financial reporting bases are included in the 2019 and 2018 deferred tax assets related to property and equipment, net, in the above table. The significant components of our tax loss carryforwards and related tax assets at December 31, 2019 are as follows:
Country |  | Tax loss carryforward |  | Related tax asset |  | Expiration date
| in millions |  |
U.K.: |  |  |  |  |
Amount attributable to capital losses | $ | 16,052.0 |  |  | $ | 2,728.8 |  |  | Indefinite
Amount attributable to net operating losses | 1,222.4 |  |  | 207.8 |  |  | Indefinite
The Netherlands | 3,204.0 |  |  | 696.2 |  |  | 2020-2025
Belgium | 1,320.4 |  |  | 330.1 |  |  | Indefinite
Ireland | 713.8 |  |  | 89.4 |  |  | Indefinite
Luxembourg | 586.4 |  |  | 159.4 |  |  | Indefinite
France | 533.3 |  |  | 137.8 |  |  | Indefinite
Other | 416.8 |  |  | 18.0 |  |  | Various
Total | $ | 24,049.1 |  |  | $ | 4,367.5 |  |  |
Our tax loss carryforwards within each jurisdiction combine all companies’ tax losses (both capital and ordinary losses) in that jurisdiction, however, certain tax jurisdictions limit the ability to offset taxable income of a separate company or different tax group with the tax losses associated with another separate company or group. Further, tax jurisdictions restrict the type of taxable income that the above losses are able to offset. The majority of the tax losses shown in the above table are not expected to be realized, including certain losses that are limited in use due to change in control or same business tests. We have taxable outside basis differences on certain investments in non-U.S. subsidiaries. No additional income taxes have been provided for any undistributed foreign earnings, or any additional outside basis difference inherent in these entities, as these amounts continue to be reinvested in foreign operations. Determination of the amount of any applicable deferred taxes on such outside basis difference is not practicable. Through our subsidiaries, we maintain a presence in many countries. Many of these countries maintain highly complex tax regimes that differ significantly from the system of income taxation used in the U.K. and the U.S. We have accounted for the effect of these taxes based on what we believe is reasonably expected to apply to us and our subsidiaries based on tax laws currently in effect and reasonable interpretations of these laws. The Tax Cuts and Jobs Act (the 2017 U.S. Tax Act) was signed into U.S. law on December 22, 2017. Significant changes to the U.S. income tax regime include the imposition of taxes on a one-time deemed mandatory repatriation of earnings and profits of foreign corporations (the Mandatory Repatriation Tax) and a new tax on global intangible low-taxed income (the GILTI Tax). The Mandatory Repatriation Tax requires that the aggregate post-1986 earnings and profits of our foreign corporations be included in our U.S. taxable income. The one-time repatriation of undistributed foreign earnings and profits is then taxed at a rate of 15.5% for cash earnings and 8% for non-cash earnings, both as defined in the 2017 U.S. Tax Act, and is payable, interest free, over an eight year period according to a prescribed payment schedule with 45% of the tax due in the last two years. At December 31, 2019 and 2018, after considering the expected use of carryforward tax attributes and other filing positions, our liability for the Mandatory Repatriation Tax was $357.2 million and $293.3 million, respectively. This increase during 2019 is due to the net impact of (i) a settlement with tax authorities that reduced the expected use of certain carryforward tax attributes and (ii) the impact of payments made according to the prescribed payment schedule. The GILTI Tax will require our U.S. subsidiaries that are shareholders in foreign corporations to include in their taxable income for each year beginning after December 31, 2017, their pro rata share of global intangible low-taxed income. The GILTI Tax is calculated as the excess of the net foreign corporation income over a deemed return. The GILTI Tax is reported as a period cost when it is incurred. We and our subsidiaries file consolidated and standalone income tax returns in various jurisdictions. In the normal course of business, our income tax filings are subject to review by various taxing authorities. In connection with such reviews, disputes could arise with the taxing authorities over the interpretation or application of certain income tax rules related to our business in that tax jurisdiction. Such disputes may result in future tax and interest and penalty assessments by these taxing authorities. The ultimate resolution of tax contingencies will take place upon the earlier of (i) the settlement date with the applicable taxing authorities in either cash or agreement of income tax positions or (ii) the date when the tax authorities are statutorily prohibited from adjusting the company’s tax computations. In general, tax returns filed by our company or our subsidiaries for years prior to 2009 are no longer subject to examination by tax authorities. Certain of our subsidiaries are currently involved in income tax examinations in various jurisdictions in which we operate, including the Netherlands, Poland, the U.K. and the U.S. While we do not expect adjustments from the foregoing examinations to have a material impact on our consolidated financial position, results of operations or cash flows, no assurance can be given that this will be the case given the amounts involved and the complex nature of the related issues. The changes in our unrecognized tax benefits are summarized below:
| 2019 |  | 2018 |  | 2017
| in millions
Balance at January 1 | $ | 857.8 |  |  | $ | 350.4 |  |  | $ | 217.0 |
Settlements with tax authorities | (111.3 | ) |  | — |  |  | (3.6 | )
Reductions for tax positions of prior years | (80.7 | ) |  | (117.9 | ) |  | (20.4 | )
Foreign currency translation | (4.3 | ) |  | (8.5 | ) |  | 14.1 |
Additions based on tax positions related to the current year | 1.8 |  |  | 180.0 |  |  | 4.5 |
Additions for tax positions of prior years | 1.0 |  |  | 457.4 |  |  | 138.8 |
Lapse of statute of limitations | — |  |  | (3.6 | ) |  | — |
Balance at December 31 | $ | 664.3 |  |  | $ | 857.8 |  |  | $ | 350.4 |
No assurance can be given that any of these tax benefits will be recognized or realized. As of December 31, 2019, 2018 and 2017, there are $546.5 million, $759.8 million, and $189.3 million of unrecognized tax benefits that would have a favorable impact on our effective income tax rate if ultimately recognized, after considering amounts that we would expect to be offset by valuation allowances and other factors. During 2020, it is reasonably possible that the resolution of ongoing examinations by tax authorities, as well as the expiration of statutes of limitation and other items, could result in reductions to our unrecognized tax benefits related to tax positions taken as of December 31, 2019. The amount of any such reductions could range up to $285.0 million, of which substantially all would have a positive impact on our effective tax rate. Other than the potential impacts of these ongoing examinations and the expected expiration of certain statutes of limitation, we do not expect any material changes to our unrecognized tax benefits during 2020. No assurance can be given as to the nature or impact of any changes in our unrecognized tax positions during 2020. During 2019, 2018 and 2017, the income tax expense of our continuing operations includes net income tax expense of $22.6 million, $58.9 million and $5.5 million, respectively, representing the net accrual of interest and penalties during the period. Our other long-term liabilities include accrued interest and penalties of $115.1 million at December 31, 2019.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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