Deduction of deferred tax assets that rely on future profitability
Article 38
1. Institutions shall determine the amount of deferred tax assets that rely on future profitability that require deduction in accordance with this Article. 2. Except where the conditions laid down in paragraph 3 are met, the amount of deferred tax assets that rely on future profitability shall be calculated without reducing it by the amount of the associated deferred tax liabilities of the institution. 3. The amount of deferred tax assets that rely on future profitability may be reduced by the amount of the associated deferred tax liabilities of the institution, provided the following conditions are met: (a) the entity has a legally enforceable right under applicable national law to set off those current tax assets against current tax liabilities; (b) the deferred tax assets and the deferred tax liabilities relate to taxes levied by the same taxation authority and on the same taxable entity. 4. Associated deferred tax liabilities of the institution used for the purposes of paragraph 3 may not include deferred tax liabilities that reduce the amount of intangible assets or defined benefit pension fund assets required to be deducted. 5. The amount of associated deferred tax liabilities referred to in paragraph 4 shall be allocated between the following: (a) deferred tax assets that rely on future profitability and arise from temporary differences that are not deducted in accordance with Article 48(1); (b) all other deferred tax assets that rely on future profitability. Institutions shall allocate the associated deferred tax liabilities according to the proportion of deferred tax assets that rely on future profitability that the items referred to in points (a) and (b) represent.