Is the legal reference to Article 39 CRR of row 020 in template C04.00 in Annex II of ITS on supervisory reporting correct?
In the European Commission’s Proposal for a Regulation on prudential requirements for credit institutions and investment firms of 20 July 2011 (COM(2011) 452 final, 2011/0202 (COD)), “deferred tax assets that do not rely on future profitability” according to then Article 36 (Article 39 in the final CRR) comprised
In the final CRR, the items listed in (a) and (b) above are covered by Article 39(1) CRR and shall be subject to an individual risk weight in accordance with Chapter 2 or 3 of Title II of Part Three of the CRR, while the item listed in (c) above are covered by Article 39(2) CRR, where the conditions for their non-deduction are further elaborated, and which are subject to a risk weight of 100%.
The headline of Article 39 CRR has been changed compared to the European Commission’s Proposal and now differentiates between tax overpayments, tax loss carry backs (para. 1 of Article 39 CRR) and deferred tax assets that do not rely on future profitability (para. 2 of Article 39 CRR). It seems that this change has not been reflected in the ITS on supervisory reporting, yet.
The legal reference of row 020 in template C 04.00 of Annex II in Regulation (EU) No 680/2014 (ITS on Supervisory Reporting) is not correct. The legal references of row 020 of template C 04.00 in Annex II of ITS on supervisory reporting will be amended and shall refer to Article 39 (2) CRR. In addition a new row (independent from item 1 ‘total deferred tax assets’ and item 2 ‘Total deferred tax liabilities’) will be added in template C 04.00 which will be populated according to Article 39 (1) of CRR.
Until the new row is introduced in the template, both deferred tax assets that do not rely on future profitability as addressed by Article 39 (2) CRR and tax overpayments and tax loss carry backs as addressed by Article 39 (1) CRR shall be reported in row 020 of template C 04.00.