The International Financial Reporting Standards allow companies free play to determine the effective tax rate

Abstract: A low effective tax rate of multinationals and tax avoidance keeps the public debate alive. Prior research with regard to the effective tax rate of Dutch multinationals shows that by calculating the effective tax rate too many incommensurables are used, but that there was sufficient evidence that Dutch multinationals show a low effective tax rate. In this study we analyze the components of the effective tax rate and the notes to the financial statements of companies listed on the Amsterdam Stock Exchange (AEX). We find that an important part of the effective tax rate is depending on subjective decisions of company’s management. So, one has to be very careful by drawing conclusions from the disclosed effective tax rate. On behalf of stakeholders we recommend to disclose separately the part of the reconciliation between the corporate tax rate and the effective tax rate which is depending on subjective decisions of company’s management.

Keywords : Effective tax rate, tax haven, tax avoidance, disclosure.

1

1 Introduction The tax position of a company in the published annual accounts receives much attention in the professional literature. Within this field of study the effective tax rate is a fascinating variable. Through the effective tax rate companies express their amount of taxes based on realized profits they will have to pay sooner or later.

Frequently the effective tax rate attracts attention in newspapers as well as in academic journals. A screaming headline in the NRC Handelsblad (a leading Dutch newspaper), August 2007 reads, “Do multinationals pay taxes?”. This was a reaction 1 to a published article in the “ Financial Times, which reported us that one third of British multinationals does not pay taxes at all and that paying taxes of two third of the 700 British multinationals does not hardly amount to anything. An article in another newspaper, i.e. de Volkskrant: “The Netherlands a tax haven for multinationals” (October 2011) raised several questions in the Dutch parliament. The article shows that many international companies realize a low effective tax rate by using tax havens.

The message of the two articles mentioned mostly carries a political undertone. This paper enlarge upon the conclusions in the newspapers. The main question is, is it allowed to draw conclusions based on the effective tax rate as published in annual accounts?

The effective tax rate is an important subject of accounting and tax research. This kind of research focuses on the way companies disclose taxes in the annual accounts. The effective tax rate in the annual accounts is determined by tax law, but in many cases also by subjective choices of the company management as far as it is justifiable within legislation 2.

Analyzing the effective tax rate of companies listed on the Amsterdam Stock Exchange (AEX) shows us, that we have to be very careful by drawing conclusions from the published annual accounts. The adage does not run as “measurement precedes knowledge”, but “do know what you are measuring”.

Possibly a precise and more detailed reconciliation between the company’s tax rate and the effective tax rate will facilitate a well-balanced judgment. The paper proceeds as follows. In the next section we review prior literature and provide examples of other research in which the effective tax rate is the object of

1 Grotenhuis, NRC Handelsblad, August 2007, Do multinationals pay taxes? 2 Witjes J.P.J.,T.L.M. Verdoes, D.H. van Offeren, J. Scholten, De effectieve belastingdruk wordt niet alleen bepaald door wet- en regelgeving (Not only tax law determines the effective tax rate), Weekblad Fiscaal Recht, 21 november 2013, p. 1390 – 1394. 2

the study. In section 3 we analyze thoroughly the components of the effective tax rate. In section 4 we present the results of our empirical research. In section 5 we provide the conclusions and comments.

2 Literature review The Netherlands Authority for the Financial Markets (AFM) finished a thematically research of the disclosure of taxes in the published annual accounts in 2007. At the end of 2010 3 the AFM concluded that indeed the prior research caused some improvements, but also that the final stage of the improvement was not achieved yet.

Research of the quality of the disclosure on the profits tax treatment in the annual accounts of listed companies (Witjes, 2008) 4 confirmed the AFM- conclusion.

A further conclusion of the AFM was that, as far as the tax position in the annual accounts is concerned, the disclosure of the components of the tax expense needs to be improved. A breakdown of the tax expense in taxes payable/receivable and deferred taxes would be necessary as well.

In addition all differences between the corporate tax rate and the effective tax rate need to be specified accurately.

Research of the CBS Statistic Netherlands (CBS) (2008) 5, with regard to the effective tax rate 2001-2006 of listed companies in the Netherlands, shows that the effective tax rate ranges between 32 and 25%.

The CBS research shows that by calculating the effective tax rate too many incommensurables are used. Misinterpretations may be caused by this. Furthermore, there was sufficient evidence that Dutch multinationals show a low effective tax rate. The explanation of this low tax rate given by the CBS was: - Incidental big tax-deductibles; - The influence of loss carry back or carry forward; - Tax-free profit caused by the sale of shares; - Compensation in case of privatization of public companies; - Group funding; - The advent of risk capital with tax expense consequences.

3 AFM, Points of interest of financial reporting, 2010, p.6. 4 Witjes J.P.J., Disclosure of profit tax in the published annual accounts, Thesis Leiden University. 5 CBS Statistic Netherlands, The effective tax rate, 2001 – 2006, The Hague/ Heerlen, 20 October 2008, p.1 – 31. 3

The research of Brouwer et al (2012) 6 shows that listed companies frequently adjust their deferred tax assets. They find that recognition of deferred tax assets owing to risks and the unremitting suspense about predicting future taxable income is a very complicated issue. Recognition of deferred tax assets whether or not and the later adjustments of deferred taxes will have complications to the disclosed effective tax rate. Brouwer et al (2012) argue a theoretical solution of a model to value deferred tax assets. A model that does justice to International Accounting Standard 12: Income Taxes (IAS 12) and shows consideration for the risks and the unremitting suspense about predicting future taxable income as well.

Hanlon and Slemrod (2009) 7 argue that the share value will increase if companies make an effort for pushing back the tax expense (a sign of tax aggressiveness). Shareholders appreciate an aggressive attitude of a company by pushing back the effective tax rate.

Watrin and Richter (2010) 8 find identical conclusions in their research. Both the research of Hanlon and Slemrod and the research of Watrin and Richter demonstrate an association between the share price and the effective tax rate.

3 The specification of the effective tax rate IAS 12 shows the components that tax expense (benefit) may include (paragraph 80a-h). Companies have to disclose the reconciliation between the corporate tax rate and the effective tax rate in case of differences between them. Analyzing the reconciliation, based on IAS 12 (paragraph 80) may lead to a classification of the effective tax rate into three categories: 1. A companies tax rate, consisting of the applicable Dutch tax rate adjusted for different tax rates in certain countries in case of multinationals; 2. Tax rate adjustments in case of permanent differences, based on tax facilities, between the published company accounts and the tax accounts; 3. Tax rate adjustments for (original) temporary differences between the published company accounts and the tax accounts.

6 Brouer A, E. Naarding, S. Stoffelen, Recognition of deferred tax assets and the impact of the effective tax rate according to IAS 12, Journal of accounting and business economics, 2012, volume 86, number ½, p. 23 – 31. 7 Hanlon, M.,J. Slemrod, What does tax aggressiveness signal? Evidence from stock price reactions to news about tax shelter involvement, Journal of Public Economics 93, 2009, p. 126 – 141. 8 Watrin C.,F. Richter, What does the Effective Tax Rate signal to the Capital Market, Münster, 2010, p. 1-27. 4

Because originally only permanent differences between the published company accounts and the tax accounts will lead to differences between the corporate tax rate and the effective tax rate, the third category, (original) temporary differences, deserves some explanations. Under normal circumstances temporary differences cause a transaction in the deferred taxes. Sometimes it occurs that temporary differences do not lead to a recognized deferred tax asset. This will happen in situations that a company does not expect enough future profits to be able to deduct the deferred taxes in the future. In this case the temporary differences in question will be treated as permanent differences and will lead to an increase of the effective tax rate. The temporary differences concerned are adjustments of the deferred tax asset, or a not or a not completely recognition of the deferred tax assets in the fiscal year. A company has to verify the value of the deferred tax asset every year by drawing up the company accounts. If necessary the deferred tax asset will have to be readjusted. Examples of temporary differences treated as permanent difference are: 1. Entering as an asset of the deferred tax asset in case of prior unrecognized loss carry forward; 2. Adjustments of a deferred tax asset; 3. Unrecognized loss carry forward.

In any of the three examples mentioned recognition of loss carry forward or an adjustment of the deferred tax asset needs a subjective prediction of future taxable income by company’s management. Under these circumstances an instrument is close at hand to manipulate the effective tax rate. In particular if we review the findings of Hanlon and Slemrod (2009), that shareholders appreciate an aggressive attitude by putting back the effective tax rate by companies.

We illustrate this with an example. In the example we will show a lower effective tax rate as a result of an unrecognized carry forward.

Example:

In 2012 Company X has a business profit of € 100,000. The business profit for tax purpose is also € 100,000. The tax declaration 2012 shows a loss carry forward 2011 of €40,000. In 2011 this loss carry forward was unrecognized, because the management didn’t expect enough taxable profit at the end of 2011. The current tax rate is 25%.

The journal entry of the tax burden 2012 is as follows: Tax expense ( 25% van (€ 100,000 - € 40,000) € 15,000 Tax payable € 15,000 5

(25% of the taxable income (€ 100,000 - € 40,000) The effective tax rate is 15% because the loss carry forward of 2011 is treated as a permanent difference in 2012.

In case of recognition of loss carry forward in 2011 is € 10,000 (25% of € 40,000), the journal entry of the tax expense in 2012 should be:

Tax expense (25% van €100,000) € 25,000 Deferred tax assets (25% van € 40,000) € 10,000 Tax payable € 15,000 (25% of the taxable income (€ 100,000 - € 40,000) The effective tax rate is 25% because the loss carry forward of 2011 is treated as a temporary difference in 2012.

The example shows an effective tax rate depending on subjective decisions of company’s management with regard to the recognized or unrecognized loss carry forward.

4 Empirical research of the effective tax rate of AEX- companies in 2008 – 2011 To get an impression of the disclosed effective tax rate of listed AEX-companies at the Amsterdam stock exchange, we analyzed the reconciliation between the corporate tax rate and the effective tax rate in the years 2008 - 2011. In our research 23 AEX-companies are involved. Without exception all 23 companies involved disclose this reconciliation in the notes to the consolidated financial statements. With reference to a deviating financial year Air France- KLM has not been assimilated into the research. The 23 AEX-companies show effective tax rates with remarkable differences. Table 1shows the yearly highest, lowest and average tax rates, separated in tax expense and tax benefit.

Corporate tax expense 2008 2009 2010 2011 Highest rate 473.50 % 51.75 % 50.60 % 52.16 % Lowest rate 1.98 % 1.60 % 1.00 % 4.80 % Number of companies 20 17 22 20 Average rate 52.01 % 21.59 % 18.95 % 19.49 %

Corporate tax benefit 2008 2009 2010 2011 Highest rate -117.9 % -143.96 % -79.69 % 55.60 % Lowest rate -4.10 % -6.80 % -79.69 % 22.60 % Number of companies 3 6 1 3 Average rate -56.83 % -57.93 % -79.69 % -33.79 % Table 1 Tax rates AEX-companies 2008 -2011

6

Tables 4, 5, 6 and 7 in the appendix show a specification of the tax rates per company of the years 2008 - 2011. In these tables we separate the part of the tax rates depending on a subjective prediction of future taxable income as follows: - Recognition of previously unrecognized temporary differences; - Recognition or adjustments deferred tax assets; - Under (over)-provided in prior years; - Recognition or adjustments deferred tax assets; - Impairment adjustments; - Other.

In the years 2008 - 2011 we find huge differences in the average effective tax rates. The variance in the average rate in 2008 in relation to the years 2009 - 2011 is mainly caused by the high effective tax rate of Royal Philips Electronics NV and Wereldhave NV. The high effective tax rates of both companies are caused by impairment adjustments in 2008, treated like permanent differences. Also the huge variance in effective tax rate is outstanding, both by companies with a tax expense and by companies with a tax benefit.

Table 2 shows the yearly average effective tax rate from Table 1 split up in a part of the tax rate depending on a subjective prediction of future taxable income and the remaining part which is not depending of subjective decisions of the company.

The remaining part includes the corporate tax rate adjusted for permanent differences. 9

Effective tax rate 2008 Effective tax rate 2009 Effective tax rate 2010 Effective tax rate 2011 Depending on a Remaining part Depending on a Remaining part Depending on a Remaining part Depending on a Remaining part subjective prediction of the effective subjective prediction of the effective subjective prediction of the effective subjective prediction of the effective of future taxable tax rate of future taxable tax rate of future taxable tax rate of future taxable tax rate Coporate tax expense income income income income Average tax rate 39.73 % 12.28% 7.10% 14.49% -1.06% 20.01% 0.01 % 19.48 % Number of companies 20 20 17 17 22 22 20 20 Highest individual adjustment 453.26% 62.00% -15.70% 32.14% Coporate tax benefit Average tax rate -19.53% -37.30% 18.99% -76.92% 22.57% -102.26% -178.86 % 77.49 % Number of companies 3 3 6 6 1 1 3 3 Highest individual adjustment -61.80% 81.30% 22.57% -112.00% Table 2 Average effective tax rates 2008 – 2011

9 For example see Table 2: The average tax expense 2008 is 52.01%. The tax expense is split up in a part of 39.73% depending on a subjective prediction of future taxable income and the remaining part of the average tax expense of 12.28%. 7

Table 2 shows the highest individual adjustment of both the corporate tax expense and the corporate tax benefit. The adjustments are ranging between -15.70% and 453.26% (corporate tax expense), and between -112% and 81.30% (corporate tax benefit). In the tables 4, 5, 6 and 7 in the appendix we specify the adjustments of the effective tax rate per company, as far as the effective tax rate is depending on a subjective prediction of future taxable income. The biggest adjustments are caused by impairments. Table 2 shows that subjective decisions strongly influence the outcome of the effective tax rate. A huge part of the effective tax rate depends on a prediction of future taxable income by company’s management. It also occurs that an originally tax benefit converts into a tax expense (Royal Philips Electronics NV, 2008). In Table 3 we illustrate for three AEX-companies an extreme course of the effective tax rate within the research period. Not only we see a strong yearly variety, but also extreme ups and downs in the part of the tax rate depending on subjective decisions. The important adjustment of the tax rate of Randstad NV is classified as “other” and therefore entered as “depending on subjective prediction of future taxable income” in Table 3.

Royal Philips Electronics NV Randstad Holding NV Wereldhave NV Corporate effective tax rate 2008 2009 2010 2011 2008 2009 2010 2011 2008 2009 2010 2011 Part of the effective tax rate not depending on a subjective prediction of future taxable income -157.70% 6.20% 23.90% 56.40% -56.10% -133.55% 24.98% 31.10% 20.24% 21.08% 9.03% -2.81% Part of the effective tax rate depending on a subjective prediction of future taxable income 337.90% 16.10% 2.30% -112.00% -61.80% 81.30% -15.70% -7.90% 453.26% 2.92% -2.93% -20.36% Corporate effective tax rate 180.20% 22.30% 26.20% -55.60% -117.90% -52.25% 9.28% 23.20% 473.50% 24.00% 6.10% -23.17% Table 3 Effective tax rate 2008 – 2011 of Royal Philips Electronics NV, Randstad Holding NV and Werelhave NV

In our research we find that of the 23 AEX-companies from 2008 – 2011 an average number of 7 to 8 companies arrive at an effective tax rate far below the level of the corporate tax rate 10 . As an exception we can state Unilever NV. During the research period Unilever NV has a stable effective tax rate of 26% 11 . However, in all fairness we have to admit that a forced round off exercises was necessary to achieve this. Finally, our empirical research shows that in 2008 a number of 14, in 2009 and 2010 a number of 16, and in 2011 a number of 15 of the 23 AEX-companies class a part and in some cases an important part of the reconciliation between the corporate tax rate and the effective tax rate under the heading “other”. No doubt

10 See the appendix. 11 See the appendix. 8

that as far as that is concerned it will be a question of “not-substantial” affairs, but in that case a thorough reconciliation is out of the question.

5 Conclusions and comments Frequently the effective tax rate receives much attention in newspapers and academic journals. Apparently the idea, that multinationals avoid taxes on a large scale, is a source of concern to tax authorities and keeps the public conversation alive. The publications raised more than once questions in the Dutch parliament.

Prior research of the AFM and the CBS does show some problems. These problems however are indications of an inaccurate, less detailed and incomparable disclosure of taxes in published annual accounts. Moreover the CBS shows causes of a relative low effective tax rate of Dutch multinationals.

In our paper we analyze the components of the effective tax rate. We find that one should be very careful by drawing conclusions from the disclosed effective tax rate and the notes to the financial statements. We find that an important part of the effective tax rate is depending on subjective decisions of company’s management. The management decisions lead to adjustments of the effective tax rate based on recognition of previously unrecognized temporary differences, recognition or adjustments of deferred tax assets, impairment and under (over)- provided deferred tax assets in prior years. So it will be possible that a low effective tax rate has been caused by adjustments based on tax positions of prior years. The conclusion that companies do not pay enough taxes may be premature. To realize an objective comparison between companies, it will be necessary to take the adjustments of the effective tax rate into consideration.

Our recommendation would be a separation of the reconciliation between the corporate tax rate and the effective tax rate in two parts: 1. A part not depending on a subjective prediction of future taxable income; 2. A part depending on a subjective prediction of future taxable income.

The second part depending on subjective decisions leads to tax rate adjustments for (originally) temporary differences between the published company accounts and the tax accounts. Based on the subjective decisions mentioned the company has got an instrument to manipulate the effective tax rate. In our opinion the notes to the financial statements have to disclose this information on behalf of stakeholders.

9

Appendix Specifications of the effective tax rate 2008 - 2011 of AEX-companies split up in a part of the effective tax rate not depending on a subjective prediction of future taxable income and a part depending on a subjective prediction of future taxable income.

Effective Part of the Part of the effective tax rate depending on a subjective prediction of 2008 tax rate effective tax future taxable income rate not Recognition of previously unrecognized temporary differences depending Recognition or adjustments deferred tax assets on a subjective Under (over)-provided in prior years prediction of Recognition or adjustments deferred tax assets future taxable Impairment adjustments income Other 1. ROYAL DUTCH SHELL PLC 56.12 55.69 0.07 0.36 2. ARCELORMITTAL S.A. 9.52 12.85 -3.55 0.22 3. ROYAL AHOLD NV 8.30 8.70 -0.40 4. AIR FRANCE - KLM 5. ROYAL PHILIPS ELECTRONICS NV 180.20 -157.70 69.30 -14.50 283.10 6. UNILEVER NV 26.00 28.00 -2.00 7. ING GROEP NV -48.50 -72.71 24.21 8. AEGON NV 1.98 -9.80 12.63 -0.28 -0.57 9. HEINEKEN NV 35.60 33.70 -010 -030 3.30 -1.00 10. AKZO NOBEL NV 31.40 31.80 -2.50 2.60 -0.50 11. RANDSTAD HOLDING NV -117.90 -56.10 -61.80 12. ROYAL KPN NV 29.10 29.68 -1.16 0.58 13. ROYAL DSM N.V. 24.60 23.50 1.10 14. ASML HOLDING N.V. -4.10 16.90 -21.00 15. POSTNL N.V. TNT? 30.20 29.00 1.20 16. WOLTERS KLUWER NV 18.00 18.00 17. ROYAL BOSKALIS WESTMINSTER NV 19.60 21.70 -3.40 1.30 18. FUGRO NV 24.70 26.10 0.00 -1.20 -0.20 19. SBM OFFSHORE N.V. 4.00 4.00 20. TOMTOM NV 30.80 29.10 1.70 21. UNIBAIL-RODAMCO 3.30 11.70 -0.80 -0.20 -7.40 22. CORIO N.V. 8.30 9.70 -0.40 -1.00 23. WERELDHAVE NV 473.50 20.24 -63.25 -44.20 484.61 76.10 24. REED ELSEVIER NV 25.00 19.65 5.35

1040.20 245.61 -4.45 18.68 -24.18 -39.29 760.31 83.54 Average tax expense 52.01 12.28 -0.22 0.93 -1.21 -1.96 38.02 4.18 -170.50 -111.91 24.21 -82.80 Average tax benefit -56.83 -37.30 8.07 -27.60 Table 4 Specification of the effective tax rate 2008 of AEX-companies The companies number 7, 11 and 14 have a tax benefit.

10

Effective Part of the Part of the effective tax rate depending on a subjective prediction of 2009 tax rate effective tax future taxable income rate not Recognition of previously unrecognized temporary differences depending Recognition or adjustments deferred tax assets on a subjective Under (over)-provided in prior years prediction of Recognition or adjustments deferred tax assets future taxable Impairment adjustments income Other 1. ROYAL DUTCH SHELL PLC 51.75 52.34 0.13 -0.72 2. ARCELORMITTAL S.A. -101.69 -109.55 5.18 2.68 3. ROYAL AHOLD NV 14.60 15.59 -0.99 4. AIR FRANCE - KLM 5. ROYAL PHILIPS ELECTRONICS NV 22.30 6.20 13.30 -0.30 3.10 6. UNILEVER NV 26.00 26.00 -3.00 3.00 7. ING GROEP NV -30.90 -64.60 -2.10 35.80 8. AEGON NV -143.96 -145.04 10.99 -10.13 0.22 9. HEINEKEN NV 22.00 22.90 -0.10 -0.50 0.90 -1.20 10. AKZO NOBEL NV 26.40 26.10 -0.30 1.70 -1.10 11. RANDSTAD HOLDING NV -52.25 -133.55 81.30 12. ROYAL KPN NV -6.80 27.53 -35.01 0.68 13. ROYAL DSM N.V. 23.10 19.60 3.50 14. ASML HOLDING N.V. -12.00 -36.30 24.30 15. POSTNL N.V. TNT? 38.20 26.30 9.80 2.10 16. WOLTERS KLUWER NV 3.00 -59.00 62.00 17. ROYAL BOSKALIS WESTMINSTER NV 22.40 22.60 -1.40 1.20 18. FUGRO NV 21.40 22.00 -0.20 -0.10 -0.30 19. SBM OFFSHORE N.V. 1.60 1.60 20. TOMTOM NV 22.50 16.50 6.00 21. UNIBAIL-RODAMCO 7.00 4.80 0.20 2.00 -6.20 6.20 22. CORIO N.V. 31.70 15.00 2.50 14.20 23. WERELDHAVE NV 24.00 21.08 -6.43 9.32 0.03 24. REED ELSEVIER NV 9.00 67.10 2.29

366.95 246.32 -0.10 6,87 -5.60 7.14 78.02 34.30 Average tax expense 21.59 14.49 -0.01 0,40 -0.33 0.42 4.59 2.02 -347.60 -461.51 3.08 46.79 10.13 -35.01 109.18 Average tax benefit -57.93 -76.92 0.51 7.80 1.69 -5.84 18.20 Table 5 Specification of the effective tax rate 2009 of AEX-companies The companies number 2, 7, 8, 11, 12 and 14 have a tax benefit.

Effective Part of the Part of the effective tax rate depending on a subjective prediction of 2010 tax rate effective tax future taxable income rate not Recognition of previously unrecognized temporary differences depending Recognition or adjustments deferred tax assets on a subjective Under (over)-provided in prior years prediction of Recognition or adjustments deferred tax assets future taxable Impairment adjustments income Other 1. ROYAL DUTCH SHELL PLC 50.60 51.72 -0.33 -0.79 2. ARCELORMITTAL S.A. -79.69 -102.26 20.47 2.10 3. ROYAL AHOLD NV 25.20 25.20 4. AIR FRANCE - KLM 5. ROYAL PHILIPS ELECTRONICS NV 26.20 23.90 2.80 -0.50 6. UNILEVER NV 26.00 26.00 -3.00 3.00 7. ING GROEP NV 25.70 13.55 12.15 8. AEGON NV 8.06 17.15 2.56 -11.39 -0.26 9. HEINEKEN NV 22.50 22.50 -0.10 -0.40 0.50 10. AKZO NOBEL NV 18.50 21.40 -1,00 -1.50 -0.40 11. RANDSTAD HOLDING NV 9.28 24.98 -15.70 12. ROYAL KPN NV 21.80 28.34 -7.53 0.99 13. ROYAL DSM N.V. 24.40 19.40 5.00 14. ASML HOLDING N.V. 17.80 15.20 2.60 15. POSTNL N.V. TNT? 24.40 26.10 0.80 -2.50 16. WOLTERS KLUWER NV 19.00 19.00 17. ROYAL BOSKALIS WESTMINSTER NV 19.80 19.40 0.40 18. FUGRO NV 21.90 22.30 -0.40 19. SBM OFFSHORE N.V. 1.00 1.00 20. TOMTOM NV 19.70 24.20 -4.50 21. UNIBAIL-RODAMCO 4.60 7.90 -3.20 -0.10 22. CORIO N.V. 8.40 6.40 1.20 0.80 23. WERELDHAVE NV 6.10 9.03 0.07 -3.08 0.08 24. REED ELSEVIER NV 16.00 15.48 0.52

416.94 440.15 2.46 7.42 -14.69 -5.36 -2.28 -10.76 Average tax expense 18.95 20.01 0.11 0.33 -0.67 -0.24 -0.10 -0.49 -79.69 -102.26 20.47 2.10 Average tax benefit -79.69 -102.26 20.47 2.10 Table 6 Specification of the effective tax rate 2010 of AEX-companies The company number 2 has a tax benefit.

11

Effective Part of the Part of the effective tax rate depending on a subjective prediction of 2011 tax rate effective tax future taxable income rate not Recognition of previously unrecognized temporary differences depending Recognition or adjustments deferred tax assets on a subjective Under (over)-provided in prior years prediction of Recognition or adjustments deferred tax assets future taxable Impairment adjustments income Other 1. ROYAL DUTCH SHELL PLC 52.16 54.32 -0.95 -0.62 -0.59 2. ARCELORMITTAL S.A. 42.82 10.68 26.46 5.68 3. ROYAL AHOLD NV 13.60 15.60 -2.00 4. AIR FRANCE - KLM 5. ROYAL PHILIPS ELECTRONICS NV -55.60 56.40 -13.70 -98.30 6. UNILEVER NV 26.00 25.00 -1.00 2.00 7. ING GROEP NV 22.30 17.59 4.64 0.07 8. AEGON NV 4.80 4.02 -3.38 -2.83 8.52 -1.53 9. HEINEKEN NV 26.10 25.80 -0.50 0,70 0.10 10. AKZO NOBEL NV 26.70 28.60 -1.00 -1.20 0.40 -0.10 11. RANDSTAD HOLDING NV 23.20 31.10 14.70 -22.60 12. ROYAL KPN NV 12.40 21.37 -11.03 2.06 13. ROYAL DSM N.V. 13.10 14.00 -0.90 14. ASML HOLDING N.V. 11.00 11.10 -0.10 15. POSTNL N.V. TNT? -22.60 23.90 -47.30 0.80 16. WOLTERS KLUWER NV 22.00 25.54 -1.29 -2.25 17. ROYAL BOSKALIS WESTMINSTER NV 17.30 16.10 4.30 -3.10 18. FUGRO NV 13.30 16.10 -2.60 -0.20 19. SBM OFFSHORE N.V. 12.80 12.80 20. TOMTOM NV 12.90 26.10 -5.90 -3.70 -3.60 21. UNIBAIL-RODAMCO 7.40 7.70 -1.90 0.10 1.50 22. CORIO N.V. 10.90 7.30 0.70 2.90 23. WERELDHAVE NV -23.17 -2.81 -20.30 -0.06 24. REED ELSEVIER NV 19.00 18.69 0.31

389.78 389.51 -5.98 11.53 -14.28 9.17 16.20 -16.37 Average tax expense 19.49 19.48 -0.30 0.58 -0.71 0.46 0.81 -0.82 -101.37 77.49 -13.70 -20.30 -145.60 0.74 Average tax benefit -33.79 25.83 -4.57 -6.77 -48.53 0.25 Table 7 Specification of the effective tax rate 2011 of AEX-companies 12 The company numbers 5, 15 and 23 have a tax benefit.

12 Royal Boskalis Westminster NV, TomTom NV and Wereldhave NV are AMX-listed companies in 2011. 12