Are the provisions of Article 26(2) CRR regarding independently verified financial statements and permission of competent authorities applicable for determining deferred tax asset that rely on future profitability that existed before 1.1.2014?
During the transition period for deferred tax assets that existed before 1.1.2014 and that exceed the thresholds of Article 470 CRR the applicable percentage to determine the amount to be deducted from CET1 is laid down in Article 478(2) CRR. In order to apply Article 478(2) CRR deferred taxes that existed before 1.1.2014 have to be determined.
From our perspective two alternatives are available to determine the basis for deferred taxes that existed before 1.1.2014:
1. following the provisions of Art. 26 para. 2 CRR the deferred taxes must be based on
a. the audited and formally confirmed financial statements; or
b. the independently verified/audited interim financial statements and permission of competent authorities has been granted.
2. deferred taxes are based on the booked values at the 31.12.2013 (the institution’s financial year deviates from the calendar year, so 31.12. is not the financial statement
date and audited financial statements are not available at this date).
Please note that as part of adjustments to the Single Rulebook Q&A process, agreed by the EBA and the European Commission, it has been decided to reject outstanding questions submitted before 1 January 2020, when the Q&A process was updated as part of the last ESAs Review. In particular, the question that you have submitted has now regrettably been rejected and will not be addressed.
If you believe your question would still benefit from clarification, you are invited to resubmit your question, adapting it to reflect any legislative, regulatory or other relevant developments that may have occurred since the initial date of submission. The EBA will aim to address resubmitted questions as a matter of priority. When considering to resubmit, you are kindly requested to observe the updated admissibility criteria agreed in the context of the adjustment of the Q&A process, available in the Additional background and guidance for asking questions. We hope for your understanding.