Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Components of Income (Loss) Before Income Taxes

he components of income (loss) before income taxes are as follows: 

	2020	2019	2018
Netherlands	447	429	2,570
Foreign	(446)	(138)	(195)
	1	291	2,375

Components of Benefit (Expense) for Income Taxes

The components of income tax benefit (expense) are as follows:

	2020	2019	2018
Current taxes:
Netherlands	(147)	(90)	(296)
Foreign	(119)	(105)	(91)
	(266)	(195)	(387)
Deferred taxes:
Netherlands	58	(28)	2
Foreign	291	203	209
	349	175	211
Total income tax benefit (expense)	83	(20)	(176)

Reconciliation of Statutory Income Tax Rate

A reconciliation of the statutory income tax rate in the Netherlands as a percentage of income (loss) before income taxes and the effective income tax rate is as follows:

	2020		2019		2018
	amount	%	amount	%	amount	%
Statutory income tax rate in the Netherlands	—	25.0	73	25.0	594	25.0
Rate differential between the local statutory rates and the statutory rate of the Netherlands	22	2,175.0	16	5.5	19	0.8
Net change in valuation allowance	35	3,500.0	59	20.2	10	0.4
Non-deductible expenses/losses	61	6,100.0	52	17.8	64	2.7
Netherlands tax incentives	(48)	(4,800.0)	(68)	(23.2)	(252)	(10.6)
Foreign tax incentives	(117)	(11,700.0)	(118)	(40.5)	(119)	(5.0)
Changes in estimates of prior years' income taxes	(13)	(1,300.0)	(3)	(1.2)	(83)	(3.5)
Sale of non-deductible goodwill	10	1,000.0	—	—	—	—
Withholding taxes	(31)	(3,100.0)	5	1.8	(12)	(0.6)
Other differences	(2)	(200.0)	4	1.5	(45)	(1.8)
Effective tax rate	(83)	(8,300.0)	20	6.9	176	7.4

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Principal Components of Deferred Tax Assets and Liabilities

The principal components of deferred tax assets and liabilities are presented below:

	2020	2019
Operating loss and tax credit carry forwards	480	499
Disallowed interest carry forwards	69	103
Other accrued liabilities	107	111
Pensions	121	95
Other non-current liabilities	58	53
Share-based compensation	13	15
Restructuring liabilities	15	5
Receivables	55	64
Inventories	8	4
Total Deferred Tax Assets	926	949
Valuation allowance	(227)	(190)
Total Deferred Tax Assets, net of valuation allowance	699	759
Identified intangible assets, net	(116)	(520)
Undistributed earnings of foreign subsidiaries	(54)	(99)
Property, plant and equipment, net	(15)	(34)
Goodwill	(66)	(43)
Other current and non-current assets	(56)	(52)
Total Deferred Tax Liabilities	(307)	(748)
Net Deferred Tax Position	392	11

Classification of Deferred Tax Assets and Liabilities in Consolidated Balance Sheets

The classification of the deferred tax assets and liabilities in the Company’s Consolidated Balance Sheets is as follows:

	2020	2019
Deferred tax assets within other non-current assets	477	293
Deferred tax liabilities within non-current liabilities	(85)	(282)
	392	11

Expiration of Tax Loss Carryforwards

At December 31, 2020 tax loss carryforwards of $737 million (inclusive of $162 million of U.S. state tax losses) will expire as follows:

	Balance	Scheduled expiration
	December 31,
	2020	2021	2022	2023	2024	2025	2026-2030	later	unlimited
Tax loss carryforwards	737	—	12	2	3	81	160	70	409

This overview is excluding disallowed interest carryforwards of $276 million which have an unlimited expiration date.

Expiration of Tax Credit Carryforwards

The Company also has tax credit carryforwards of $468 million (excluding the effect of unrecognized tax benefits), which are available to offset future tax, if any, and which will expire as follows:

	Balance	Scheduled expiration
	December 31,
	2020	2021	2022	2023	2024	2025	2026-2030	later	unlimited
Tax credit carryforwards	468	1	11	10	11	18	71	294	52

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits excluding interest and penalties is as follows:

	2020	2019	2018
Balance as of January 1,	159	165	177
Translation differences	—	(1)	(4)
Lapse of statute of limitations	(4)	(3)	—
Increases from tax positions taken during prior periods	5	4	7
Decreases from tax positions taken during prior periods	—	(4)	(17)
Increases from tax positions taken during current period	7	7	7
Decreases relating to settlements with the tax authorities	(6)	(9)	(5)
Balance as of December 31,	161	159	165