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Current taxes are measured according to the tax rates and tax laws prevailing during the financial years to
which they relate, based on the taxable profit for the year. All changes to the short-term tax assets or liabilities
are recognized as part of the tax expense in the income statement.
Deferred income tax is determined according to the liability method which results from the temporary differ-
ences between the book value and the tax base of assets or liabilities. Deferred tax is not booked if it results
from the initial recognition of an asset or liability in a transaction, except for a business combination, which
when it occurred did not affect neither the accounting nor the tax profit or loss.
Deferred tax assets and liabilities are valued based on the tax rates that are expected to be in effect during the
period in which the asset or liability will be settled, taking into consideration the tax rates (and tax laws) that
have been put into effect or are essentially in effect up until the balance sheet date. In the event where it is
impossible to identify the timing of the reversal of the temporary differences, the tax rate in effect on the day
after the balance sheet date is used.
Deferred tax assets are recognized to the extent that there will be a future tax profit to be set against the tem-
porary difference that creates the deferred tax asset.
Deferred income tax is recognized for the temporary differences that result from investments in subsidiaries
and associates, except for the case where the reversal of the temporary differences is controlled by the Group
and it is possible that the temporary differences will not be reversed in the foreseeable future.
Most changes in the deferred tax assets or liabilities are recognized as part of the tax expense in the income
statement. Only changes in assets or liabilities that affect the temporary differences are recognized directly
in the Equity of the Group, such as the revaluation of property value, that results in the relevant change in de-
ferred tax assets or liabilities being charged against the relevant Equity account.
3.18 Employee benefits
Short-term benefits:
Short-term employee benefits (except post-employment benefits) monetary and in kind
are recognized as an expense when they accrue. Any unpaid amount is booked as a liability, while in the case
where the amount paid exceeds the amount of services rendered, the company recognizes the excess amount
as an asset (prepaid expense) only to the extent that the prepayment will lead to a reduction of future payments
or to reimbursement.
Post-employment benefits:
Post-employment benefits comprise pensions or other benefits (life insurance
and medical insurance) the company provides after retirement as an exchange for the employees’ service with
the company. Thus, such benefits include defined contribution schemes as well as defined benefits schemes.
The accrued cost of defined contribution schemes is booked as an expense in the period it refers to.
• Defined contribution scheme
According to the defined contributions scheme, the (legal or implied) obligation of the company is limited
to the amount that it has been agreed that it will contribute to the entity (i.e. pension fund) that manages
the contributions and provides the benefits. Thus the amount of benefits the employee will receive de-
pends on the amount the company will pay (or even the employee) and from the paid investments of such
contributions.
The payable contribution from the company to a defined contribution scheme, is either recognized as a li-
ability after the deduction of the paid contribution, or as an expense.
