Taxation (Tables)

12 Months Ended

Dec. 31, 2018

Summary of Tax Charge in Income Statement


Tax charge in income statement	€ million 2018			€ million 2017			€ million 2016
Current tax
Current year		(2,647	)		(2,398	)		(2,026	)
Over/(under) provided in prior years		(10	)		(21	)		158

		(2,657	)		(2,419	)		(1,868	)

Deferred tax
Origination and reversal of temporary differences		3			51			(65	)
Changes in tax rates		(13	)		609			(7	)
Recognition of previously unrecognised losses brought forward		92			92			18

		82			752			(54	)

		(2,575	)		(1,667	)		(1,922	)

Summary of Reconciliation of Effective Tax Rate

The reconciliation between the computed weighted average rate of income tax expense, which is generally applicable to Unilever companies, and the actual rate of taxation charged is as follows:


Reconciliation of effective tax rate	% 2018			% 2017			% 2016
Computed rate of tax^(a)		25			26			26
Differences between computed rate of tax and effective tax rate due to:
Incentive tax credits		(3	)		(4	)		(4	)
Withholding tax on dividends		2			2			3
Expenses not deductible for tax purposes		1			1			1
Irrecoverable withholding tax		1			1			1
Income tax reserve adjustments – current and prior year		1			—			(1	)
Transfer to/(from) unrecognised deferred tax assets		—			1			—
Others		(1	)		(1	)		—

Underlying effective tax rate		26			26			26
Non-underlying items within operating profit^(b)		(1	)		1			—
Premium paid on Buyback of preference shares^(b)		—			1			—
Impact of US tax reform^(b)		—			(7	)		—
Impact of Spreads disposal^(b)		(4	)		—			—

Effective tax rate		21			21			26

^(a)

The computed tax rate used is the average of the standard rate of tax applicable in the countries in which Unilever operates, weighted by the amount of underlying profit before taxation generated in each of those countries. For this reason, the rate may vary from year to year according to the mix of profit and related tax rates.

^(b)	See note 3 for explanation of non-underlying items.

Summary of Movements in Deferred Tax Asset (Liability)


	€ million			€ million			€ million			€ million			€ million			€ million			€ million			€ million
Movements in 2018 and 2017	As at 1 January 2018			Income statement			Other			As at 31 December 2018			As at 1 January 2017			Income statement			Other			As at 31 December 2017
Pensions and similar obligations		316			(26	)		114			404			766			(16	)		(434	)		316
Provisions and accruals		653			193			(25	)		821			922			(154	)		(115	)		653
Goodwill and intangible assets		(1,652	)		(154	)		(105	)		(1,911	)		(1,928	)		654			(378	)		(1,652	)
Accelerated tax depreciation		(679	)		5			(5	)		(679	)		(870	)		109			82			(679	)
Tax losses		130			11			(11	)		130			131			(36	)		35			130
Fair value gains		100			58			(3	)		155			(7	)		104			3			100
Fair value losses		24			(2	)		—			22			29			65			(70	)		24
Share-based payments		194			(14	)		(5	)		175			169			(5	)		30			194
Other		86			11			(20	)		77			81			31			(26	)		86

		(828	)		82			(60	)		(806	)		(707	)		752			(873	)		(828	)

Summary of Deferred Tax Assets and Liabilities

The following amounts, determined after appropriate offsetting, are shown in the consolidated balance sheet:


Deferred tax assets and liabilities	€ million Assets 2018			€ million Assets 2017			€ million Liabilities 2018			€ million Liabilities 2017			€ million Total 2018			€ million Total 2017
Pensions and similar obligations		334			294			70			22			404			316
Provisions and accruals		578			465			243			188			821			653
Goodwill and intangible assets		41			86			(1,952	)		(1,738	)		(1,911	)		(1,652	)
Accelerated tax depreciation		(64	)		(21	)		(615	)		(658	)		(679	)		(679	)
Tax losses		126			125			4			5			130			130
Fair value gains		12			23			143			77			155			100
Fair value losses		2			3			20			21			22			24
Share-based payments		59			74			116			120			175			194
Other		29			36			48			50			77			86

		1,117			1,085			(1,923	)		(1,913	)		(806	)		(828	)

Of which deferred tax to be recovered/(settled) after more than 12 months		840			730			(2,046	)		(1,868	)		(1,206	)		(1,138	)

Summary of Tax Effects of Components of Other Comprehensive Income

Tax effects of the components of other comprehensive income were as follows:


	€ million			€ million		€ million			€ million			€ million			€ million
				Tax								Tax
	Before tax 2018			(charge)/ credit 2018		After tax 2018			Before tax 2017			(charge)/ credit 2017			After tax 2017
Gains/(losses) on:^(a)
Equity instruments at fair value through other comprehensive income		51			—		51			—			—			—
Cash flow hedges		(70	)		15		(55	)		(62	)		(6	)		(68	)
Other financial instruments		—			—		—			1			(8	)		(7	)
Remeasurements of defined benefit pension plans		(437	)		109		(328	)		1,620			(338	)		1,282
Currency retranslation gains/(losses)		(869	)		8		(861	)		(1,024	)		41			(983	)

		(1,325	)		132		(1,193	)		535			(311	)		224

^(a)	Classification has changed following adoption of IFRS 9. See note 1 for further details.