11. Income tax

11.1 Income tax expense

The weighted average tax rate applicable was 24.3 % (2024: 20.5%). Income tax on the Group’s result before tax differs from the theoretical amount that would arise using BAM’s weighted average tax rate, caused by the main items:

• Reassessment of the utilisation potential for available tax losses has resulted in recognition of previously unrecognised tax losses, mainly in the Netherlands, which decreased the effective tax rate. This includes the effect of the envisaged wind down of foreign operations and subsequent liquidation of legal entities, which results in additional future tax deductions in the Netherlands.

• The Group’s share in results of joint ventures and associates is subject to the participation exemption. This decreases the effective tax rate.

• For operational losses in several countries, no deferred tax assets have been recognised as no or insufficient future taxable profits are expected, increasing the effective tax rate.

• Several general and operational expenses incurred are non-deductible for tax purposes, increasing the effective tax rate.

This can be further specified as follows

In December 2023, the Council of the European Union unanimously adopted the Directive implementing Pillar Two global minimum tax rules. This directive aims to ensure a global minimum level of taxation of 15% in all countries in which multinationals are present. The Group completed an assessment of the impact of the new rules based on initiatives presented by governments in countries in which the Group is active. Based on this assessment the Group expects to meet the transitional safe harbour requirements in almost all jurisdictions. In jurisdictions where transitional safe harbour requirements are not met, the Pillar Two charge is assessed to be nil or immaterial. The adoption of the Pillar Two Model rules by the jurisdictions in which the Group operates, is expected to have no material impact.

In all relevant jurisdictions the applicable tax rate is around 25%, well above the minimum rate of 15%. The only exception is Ireland, where the corporate income tax rate is 12.5% for trading income and 25% for non-trading income. At the current mix of income, the Group expects an effective tax rate in Ireland in the range of 13% to 16% and thus no material additional Pillar Two charge is expected. The Group applies the mandatory temporary exception to the recognition and disclosure of deferred taxes arising from the jurisdictional implementation of the Pillar Two model rules.

11.2 Deferred income tax

Deferred tax assets in a country are recognised only to the extent that it is probable that future taxable profits in that country are available against which the deductible temporary differences, available tax credits and available tax losses carry-forwards can be utilised. The assessment as to whether an entity will have sufficient taxable profits in the future is a matter requiring careful judgement based on the facts and circumstances available. Although the profit forecast shows that sufficient profit should be available in coming years to recognise a deferred tax asset for compensating losses, the Group performed further analysis of all positive and negative evidence to substantiate the position. The nature of the convincing evidence did not change significantly compared to 31 December 2024, except for the forecasted future taxable profits.

The net amount of deferred taxes slightly decreased. However, on one hand it contains a decrease due to regular utilization of tax losses offsetting operational profits for the year and on the other hand an increase driven by the reassessment of the Group’s forecasted taxable profits for the years 2026 - 2030, which resulted in the recognition of additional deferred tax assets relating to available tax losses mainly in the Netherlands.  Furthermore, the envisaged wind down of foreign operations and subsequent liquidation of legal entities resulted in future tax deductions (reflected as intangible assets and financial assets in the deferred tax movement schedule below) in the Netherlands. 

The breakdown of deferred Income tax assets and liabilities is as follows:

The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

Tax loss and tax credits can be further specified by country as follows:

In addition to the unrecognised tax losses available for carry forward, the Group has unrecognised deductible temporary differences available in the amount of €44 million.

Netherlands

Tax losses available to the fiscal unity in the Netherlands at 31 December 2025 amount to approximately €340 million (2024: €393 million). These available tax losses relate to the years 2013 – 2017 and result to a large extent from identifiable causes, including significant impairments on properties and significant restructuring costs which are both unlikely to recur. Available tax losses can be carried forward to be offset against future profits indefinitely and can be utilised up to 50% for a taxable profit exceeding €1 million. Based on estimates and timing of future taxable profits within the fiscal unity in the Netherlands for the upcoming five years, approximately €256 million of these losses are recognised (2024: €252 million). Management estimates of forecasted taxable profits in the Netherlands are based on financial budgets approved by management, extrapolated using growth rates for revenue and profit before tax margins that take into account external market data and benchmark information and taking into account past performance. Growth rates for revenue and profit before tax margins are in line with the Group’s mid- and long-term expectations. Subsequently these forecasts have been reduced to meet the recognition criteria for deferred tax assets. No specific tax planning opportunities have been taken into account. Furthermore, envisaged wind down of foreign operations and subsequent liquidation of legal entities resulted in additional future tax deductions in the Netherlands, resulting in deferred tax assets of €38 million relating to intangible assets.

Ireland

In Ireland the Group has several legal entities that have available tax losses. These entities do not form a tax group and available tax losses can only be settled by the legal entity that has incurred the losses. At 31 December 2025 the total amount of tax losses available are €21 million, of which €1.6 million is recognised (2024: €20 million of which €3 million is recognised). The legal term within which these losses may be offset against future profits is indefinite.

Belgium

In Belgium the Group has several legal entities that have available tax losses. These entities do not form a tax group and available tax losses can only be settled by the legal entity that has incurred the losses. At 31 December 2025 the total amount of tax losses available are €26 million, of which €16 million is recognised (2024: €29 million of which €18 million recognised). The legal term within which these losses may be offset against future profits is indefinite.

Germany

Although the group has sold its German activities, a number of German legal entities remain present in the Group’s legal structure. These entities have tax losses available for future settlement of in total approximately €324 million (corporate income tax) and €282 million (trade tax), for which no deferred tax asset has been recognised. The legal term within which these losses may be offset against future profits is indefinite.