Tax Policy 2019

Stakeholder interests

As part of our promise to be a better neighbor, at Ahold Delhaize, we seek to make a positive impact in the communities where we operate. One way we do this is by paying taxes. In doing so, we take into consideration social and corporate responsibility and the interests of all our stakeholders. Our overall tax approach is in line with Ahold Delhaize’s business principles, Sustainability Strategy and Code of Conduct.

Our tax policy covers six elements: tax control framework and oversight; relationships with tax authorities; government relations; compliance with tax regulations; tax in the Annual Report; and good tax practices.

Tax Control Framework and oversight

To assess and control tax risks, we have a “Tax Control Framework” in place. The Ahold Delhaize Internal Audit function reviews the effectiveness of this framework on a regular basis.

Ahold Delhaize has a well-equipped and professional Tax function. This function reports to Ahold Delhaize’s CFO and has direct access to the Management Board and the Supervisory Board. At least once a year, a tax update is presented by Ahold Delhaize Tax to the Audit, Finance and Risk Committee of the Supervisory Board.

Our tax risk appetite is based on Ahold Delhaize’s overall risk appetite, which is very low. We recognize the risk that non-compliance with applicable tax laws and regulations could result in damage to Ahold Delhaize’s reputation or to the relationship with our host countries. We also recognize that not contributing our share in taxes could impact the economic development of these countries due to reduced tax receipts. For more information, see the How we manage risk section in our Annual Report 2019.

Tax controls resulting from risk assessment exercises are defined, implemented and tested by various monitoring functions – comprising senior management and the Risk & Compliance and Internal Audit teams – making use of specific Ahold Delhaize tools developed for this purpose. Based on the annual internal audit plan, selected taxes and/or jurisdictions are audited. This results in an audit report rating the design and effective working of the tax control framework.

Each quarter, our brands approve a letter of representation, including taxes. In addition, we have a tax strategy in place that is proactively communicated throughout the company.

A whistle-blower line is in place for Ahold Delhaize associates to report any ethical or compliance concerns related to company practices, including tax matters. Training is organized for selected brands and jurisdictions, during which the Tax Policy and its main principles are explained in the form of tax risk workshops.

We are also actively involved in the field of tax technology and are developing a global tax technology strategy. We currently have various initiatives underway to optimize and upgrade our tax processes. IT assists in our tax technology projects, for example, the implementation of a global tool to monitor the tax accounting and risk positions in all jurisdictions.

Relationships with tax authorities

Ahold Delhaize engages with tax authorities based on mutual trust, and we seek open and transparent working relationships with them. This helps both the tax authorities and Ahold Delhaize ensure timely and efficient compliance. In the U.S., we participate in the IRS Compliance Assurance Program (CAP) and in the Netherlands, we concluded a covenant (horizontal monitoring) with the Dutch tax authorities. Starting in 2020, a new arrangement with the Dutch Tax Authorities will be implemented.

Government relations

As a company close to society, we value constructive dialogue regarding many aspects of taxation with the government in the countries where we operate and respond to government consultations on proposed changes to legislation, with the aim to achieve sustainable legislation.

Compliance with tax regulations

We aim to file our taxes in full compliance with local laws and regulations. Our tax compliance is based on a reasonable and responsible interpretation of tax laws. We aim to comply with the spirit as well as the letter of the law. We attempt to discuss and clarify uncertainties about the tax treatment up-front with the tax authorities. We only seek rulings from tax authorities to confirm the applicable treatment of laws and regulations based on full disclosure of the relevant facts.

Tax in the Annual Report

The Ahold Delhaize consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS).

We believe, and are proud of, the fact that by paying our share in taxes in the countries where we operate, we contribute to economic development in these countries. The following table specifies the income taxes paid per country:

€ million

2019

2018 

 

 

 

The United States

-138

-25

The Netherlands

-124

-175

Belgium

-4

-28

Greece

-14

-21

Czech Republic

-3

-0

Serbia

-10

-3

Romania

-6

-11

Other

-59

-17

 

 

 

Total income taxes paid

-358

-280

For Belgium and the Czech Republic, the income tax paid is impacted by available operating losses carryforward which are (partly) offset against taxable income. In 2018, tax payments in the United States were impacted by U.S. tax reform and by a prepayment in 2017. Other includes a tax payment in 2019 of €36 million, related to a tax claim. This claim is being disputed by Ahold Delhaize and we will continue to defend our tax position in this matter.

Our effective income tax rate (ETR) over the past year was 19.6%. This is our worldwide income tax expense in the Ahold Delhaize Annual Report and accounts of €417 million, shown as a percentage of the consolidated income before income taxes.  For a further explanation of the ETR reference, see Note 10 to the financial statements in our Annual Report 2019.

In addition, Ahold Delhaize collected and paid many other local taxes, including net-value added tax, payroll tax and social security premiums, property tax, sales and use tax, real estate tax, packaging tax, excise tax and customs duties. The total amount of these taxes exceeds €4 billion.

Good tax practices

Our tax decision-making process is based on the following examples of good tax practices:

  • We do not use opaque corporate structures or those situated in tax havens to hide relevant information from the tax authorities.
  • We do not transfer value created to low-tax jurisdictions, defined as jurisdictions listed on the EU list of non-cooperative jurisdictions for tax purposes (the EU “blacklist”) published by the Council of the European Union on December 5, 2017 (and last updated on November 14, 2019) or to the jurisdictions listed on the Netherlands’ blacklist published in the Government Gazette on December 30, 2019.
  • We provide the tax authorities with any information they require within a reasonable timeframe.
  • Our transfer pricing policy is based on the arm’s length principle. We do not have businesses in countries listed on the European Union list of non-cooperative jurisdictions for tax purposes or in countries listed on the Netherlands “blacklist.”