Grifols SA | CIK:0001438569 |

 

(27)Taxation

 

Grifols, S.A. is authorized to file consolidated tax returns in Spain with Diagnostic Grifols, S.A., Grifols Movaco, S.A., Laboratorios Grifols, S.A., Instituto Grifols, S.A., Grifols Worldwide Operations Spain, S.A. (formerly Logister, S.A), Biomat, S.A., Grifols Viajes, S.A., Grifols International, S.A., Grifols Engineering, S.A., Gri-Cel, S.A., Gripdan Invest, S.L. and VCN Biosciences, S.L. Grifols, S.A., in its capacity as Parent, is responsible for the filing and settlement of the consolidated tax return. Under prevailing tax law, Spanish companies pay 25% tax, which may be reduced by certain deductions.

 

The North American company Grifols Shared Services North America, Inc. is also authorized to file consolidated tax returns in the USA with Grifols Biologicals Inc., Grifols USA, LLC., Biomat USA, Inc., Grifols Therapeutics Inc. and Talecris Plasma Resources, Inc. The profits of the companies domiciled in the USA, determined in accordance with prevailing tax legislation, are subject to tax of approximately 36.5% of taxable income, which may be reduced by certain deductions.

 

(a)Reconciliation of accounting and taxable income

 

Details of the income tax expense and income tax related to profit for the year are as follows:

 

 

The effect of the different tax rates is basically due to a change of country mix in profits

 

On December 22, 2017, a tax reform has been approved in the United States that will take effect on January 1, 2018.

 

The Group has carried out an exercise to identify changes in the tax reform affecting its subsidiaries in the USA and an assessment of the impact that these changes will have on the manner in which the deferred taxes will revert as of December 31, 2017. In the analysis performed, the main impact comes from the change in tax rates to be applied to deferred taxes as of December 31, 2017, which have gone from a rate of 35% to 21% for fiscal years beginning on or after January 1. of 2018. The impact registered in the “income tax expense” caption amounts to Euros 171 million in the year 2017. The remaining changes in the tax legislation that affect the subsidiaries in the USA have not had a material impact nor have they required relevant judgments and estimates that could lead to significant variations in the estimate made in the future. As a consequence, we consider the estimates made as definitive.

 

(b)Deferred tax assets and liabilities

 

Details of deferred tax assets and liabilities are as follows:

 

 

Movement in deferred tax assets and liabilities is as follows:

 

 

The Spanish companies have opted to apply accelerated depreciation to certain additions to property, plant and equipment, which has resulted in the corresponding deferred tax liability.

 

The remaining assets and liabilities recognized in 2017, 2016 and 2015 were recognized in the statement of profit and loss.

 

Estimated net deferred tax assets to be reversed in a period of less than 12 months amount to Euros 51,930 thousand at

31 December 2017 (Euros 99,897 thousand at 31 December 2016).

 

The majority of the tax deductions pending application from Spanish companies related mainly to research and development, mature in 18 years.

 

Tax credits derived from the US companies are available for 20 years from their date of origin whilst tax credits from Spanish companies registered in the Basque Country are available for 15 and other remaining Spanish companies have no maturity date.

 

The Group has not recognized as deferred tax assets the tax effect of the tax loss carryforwards of Group companies, which amount to Euros 51,169 thousand (Euros 67,044 thousand at 31 December 2016).

 

The commitments from Spanish companies from the reversal of deferred tax related to provisions of investments in subsidiaries are not significant.

 

(c)Years open to inspection

 

Under prevailing legislation, taxes cannot be considered to be definitively settled until the returns filed have been inspected by the taxation authorities, or the prescription period has elapsed.

 

The main tax audits currently open in the Group are as follows:

 

 

 

 

 

Group management does not expect any significant liability to derive from these inspections.