v3.20.4

Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Components of Income (Loss) Before Income Taxes | he components of income (loss) before income taxes are as follows:
| 2020 |  | 2019 |  | 2018
Netherlands | 447 |  |  | 429 |  |  | 2,570 |
Foreign | (446) |  |  | (138) |  |  | (195) |
| 1 |  |  | 291 |  |  | 2,375 |
Components of Benefit (Expense) for Income Taxes | The components of income tax benefit (expense) are as follows:
| 2020 |  | 2019 |  | 2018
Current taxes: |  |  |  |  |
Netherlands | (147) |  |  | (90) |  |  | (296) |
Foreign | (119) |  |  | (105) |  |  | (91) |
| (266) |  |  | (195) |  |  | (387) |
Deferred taxes: |  |  |  |  |
Netherlands | 58 |  |  | (28) |  |  | 2 |
Foreign | 291 |  |  | 203 |  |  | 209 |
| 349 |  |  | 175 |  |  | 211 |
Total income tax benefit (expense) | 83 |  |  | (20) |  |  | (176) |
Reconciliation of Statutory Income Tax Rate | A reconciliation of the statutory income tax rate in the Netherlands as a percentage of income (loss) before income taxes and the effective income tax rate is as follows:
| 2020 |  | 2019 |  | 2018 |
| amount |  | % |  | amount |  | % |  | amount |  | % |
Statutory income tax rate in the Netherlands | — |  |  | 25.0 |  |  | 73 |  |  | 25.0 |  |  | 594 |  |  | 25.0 |  |
Rate differential between the local statutory rates and the statutory rate of the Netherlands | 22 |  |  | 2,175.0 |  |  | 16 |  |  | 5.5 |  |  | 19 |  |  | 0.8 |  |
Net change in valuation allowance | 35 |  |  | 3,500.0 |  |  | 59 |  |  | 20.2 |  |  | 10 |  |  | 0.4 |  |
Non-deductible expenses/losses | 61 |  |  | 6,100.0 |  |  | 52 |  |  | 17.8 |  |  | 64 |  |  | 2.7 |  |
Netherlands tax incentives | (48) |  |  | (4,800.0) |  |  | (68) |  |  | (23.2) |  |  | (252) |  |  | (10.6) |  |
Foreign tax incentives | (117) |  |  | (11,700.0) |  |  | (118) |  |  | (40.5) |  |  | (119) |  |  | (5.0) |  |
Changes in estimates of prior years' income taxes | (13) |  |  | (1,300.0) |  |  | (3) |  |  | (1.2) |  |  | (83) |  |  | (3.5) |  |
Sale of non-deductible goodwill | 10 |  |  | 1,000.0 |  |  | — |  |  | — |  |  | — |  |  | — |  |
Withholding taxes | (31) |  |  | (3,100.0) |  |  | 5 |  |  | 1.8 |  |  | (12) |  |  | (0.6) |  |
Other differences | (2) |  |  | (200.0) |  |  | 4 |  |  | 1.5 |  |  | (45) |  |  | (1.8) |  |
Effective tax rate | (83) |  |  | (8,300.0) |  |  | 20 |  |  | 6.9 |  |  | 176 |  |  | 7.4 |  |
.
Principal Components of Deferred Tax Assets and Liabilities | The principal components of deferred tax assets and liabilities are presented below:
| 2020 |  | 2019
Operating loss and tax credit carry forwards | 480 |  |  | 499 |
Disallowed interest carry forwards | 69 |  |  | 103 |
Other accrued liabilities | 107 |  |  | 111 |
Pensions | 121 |  |  | 95 |
Other non-current liabilities | 58 |  |  | 53 |
Share-based compensation | 13 |  |  | 15 |
Restructuring liabilities | 15 |  |  | 5 |
Receivables | 55 |  |  | 64 |
Inventories | 8 |  |  | 4 |
Total Deferred Tax Assets | 926 |  |  | 949 |
Valuation allowance | (227) |  |  | (190) |
Total Deferred Tax Assets, net of valuation allowance | 699 |  |  | 759 |
Identified intangible assets, net | (116) |  |  | (520) |
Undistributed earnings of foreign subsidiaries | (54) |  |  | (99) |
Property, plant and equipment, net | (15) |  |  | (34) |
Goodwill | (66) |  |  | (43) |
Other current and non-current assets | (56) |  |  | (52) |
Total Deferred Tax Liabilities | (307) |  |  | (748) |
Net Deferred Tax Position | 392 |  |  | 11 |
Classification of Deferred Tax Assets and Liabilities in Consolidated Balance Sheets | The classification of the deferred tax assets and liabilities in the Company’s Consolidated Balance Sheets is as follows:
| 2020 |  | 2019
Deferred tax assets within other non-current assets | 477 |  |  | 293 |
Deferred tax liabilities within non-current liabilities | (85) |  |  | (282) |
| 392 |  |  | 11 |
Expiration of Tax Loss Carryforwards | At December 31, 2020 tax loss carryforwards of $737 million (inclusive of $162 million of U.S. state tax losses) will expire as follows:
|  | Balance |  | Scheduled expiration
|  | December 31, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2020 |  | 2021 |  | 2022 |  | 2023 |  | 2024 |  | 2025 |  | 2026-2030 |  | later |  | unlimited
Tax loss carryforwards |  | 737 |  |  | — |  |  | 12 |  |  | 2 |  |  | 3 |  |  | 81 |  |  | 160 |  |  | 70 |  |  | 409 |
This overview is excluding disallowed interest carryforwards of $276 million which have an unlimited expiration date.
Expiration of Tax Credit Carryforwards | The Company also has tax credit carryforwards of $468 million (excluding the effect of unrecognized tax benefits), which are available to offset future tax, if any, and which will expire as follows:
|  | Balance |  | Scheduled expiration
|  | December 31, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2020 |  | 2021 |  | 2022 |  | 2023 |  | 2024 |  | 2025 |  | 2026-2030 |  | later |  | unlimited
Tax credit carryforwards |  | 468 |  |  | 1 |  |  | 11 |  |  | 10 |  |  | 11 |  |  | 18 |  |  | 71 |  |  | 294 |  |  | 52 |
Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits excluding interest and penalties is as follows:
| 2020 |  | 2019 |  | 2018
Balance as of January 1, | 159 |  |  | 165 |  |  | 177 |
Translation differences | — |  |  | (1) |  |  | (4) |
Lapse of statute of limitations | (4) |  |  | (3) |  |  | — |
Increases from tax positions taken during prior periods | 5 |  |  | 4 |  |  | 7 |
Decreases from tax positions taken during prior periods | — |  |  | (4) |  |  | (17) |
Increases from tax positions taken during current period | 7 |  |  | 7 |  |  | 7 |
Decreases relating to settlements with the tax authorities | (6) |  |  | (9) |  |  | (5) |
Balance as of December 31, | 161 |  |  | 159 |  |  | 165 |

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