v3.20.4

Income Taxes (Tables)

12 Months Ended

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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