Financial and
ESG report 2020

15c. Deferred tax reported in equity

 31.12.2020  31.12.2019
Valuation of securities at fair value through other comprehensive income (56 027) (22 559)
Valuation of cash flow hedging instruments 8 439 5 487
Actuarial gains (losses) 708 628
Deferred tax reported directly in equity (46 880) (16 444)

Changes in deferred tax recognized directly in equity are presented in Notee (39b).

On December 31, 2019, the Tax Capital Group of Bank Millennium (PGK) ended its legal existence. PGK participants (Bank Millennium S.A., Millennium Service Sp.z o.o. and Millennium Goodie Sp. z o.o.) did not extend the contract for the following years. This means that for 2020 each of the companies settles the corporate income tax individually.

Withholding tax audit for years 2015-16

On February 2019 the Head of Western Pomeranian Customs & Tax Office (Zachodniopomorski Urząd Celno-Skarbowy w Szczecinie, ZUCS) commenced tax audits regarding the correctness of withholding tax (WHT) settlements for years 2015 and 2016. On 17 December 2019 the Bank received audit results as of 13 December 2019, in which ZUCS questioned WHT-exemption on coupon interest from bonds paid to MB Finance AB with the seat in Sweden constituting a collateral to 10Y subordinated bonds with a par value of EUR 150 mio. issued by this company in December 2007 (fully amortized in December 2017). WHT arrear for these years is ca. PLN 6.7 mio. Bank does not agree with these findings, did not correct its WHT settlements for years 2015-16 and tax audits transformed by the virtue of law into tax proceedings. On 13 October 2020 the Bank received negative decisions issued by Head of ZUCS “sustaining” adverse audit’s findings. Total withholding tax arrear determined for years 2015-16 is PLN 6 580 618 to be increased by penalty interests (8% p.a.). Bank does not agree with decisions and will appeal and lodge complaints to the administrative court, if sustained in the second instance. Bank received an expert opinion as of January 29, 2020 of tax professors from the Public Finances Law Department of the Faculty of Law and Administration at Nicolaus Copernicus University in Torun, according to which ZUCS’s statement violates binding tax law provisions.

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