uniQure N.V.

13. Income taxes

a. Income tax benefit / (expense)

No current tax charges or liabilities were recorded in 2017, 2016 and 2015 by our Dutch and U.S entities since these entities generated losses. Due to the uncertainty surrounding the realization of favorable tax attributes in future tax returns, the Company has recorded a full valuation allowance against the Company’s otherwise recognizable net deferred tax assets.

For the years ended December 31, 2017, 2016 and 2015, loss before income taxes consists of the following:


	Years ended December 31,
	2017		2016		2015
	in thousands
Dutch operations	$	(60,966)	$	(51,107)	$	(63,304)
U.S. operations		(18,493)		(21,221)		(20,406)
Foreign operations		—		99		448
Total	$	(79,459)	$	(72,229)	$	(83,262)

The income tax benefit / (expense) for the years ended December 31, 2017, 2016 and 2015, consists of the following:


	Years ended December 31,
	2017		2016		2015
	in thousands
Current benefit / (expense)
Dutch operations	$	—	$	—	$	—
U.S. operations		—		—		—
Foreign operations		(10)		(51)		(51)
Deferred benefit / (expense)
Dutch operations		209		(1,094)		714
U.S. operations		—		—		—
Foreign operations		—		—		516
Total income tax benefit / (expense)	$	199	$	(1,145)	$	1,179

b. Tax rate reconciliation

The reconciliation of the Dutch statutory income tax rate to the Company’s effective tax rate for the years ended December 31, 2017, 2016 and 2015, is as follows:


	Years ended December 31,
	2017		2016		2015
	in thousands
Net loss before tax for the period	$	(79,459)	$	(72,229)	$	(83,262)
Expected tax benefit / (expense) at the tax rate enacted in the Netherlands (25%)		19,865		18,057		20,816
Difference in tax rates between the Netherlands and foreign countries		1,664		1,905		1,816
Net change in valuation allowance		(17,358)		(20,054)		(16,301)
Non-deductible expenses		(3,248)		(1,323)		(4,984)
Deductible expenses directly recognized in equity		—		—		168
Change in fair value of contingent consideration		(724)		270		(336)
Income tax benefit / (expense)	$	199	$	(1,145)	$	1,179

Non-deductible expenses predominantly relate to share-based compensation expenses for an amount of $2.5 million in 2017 (2016: $1.6 million; 2015: $2.9 million) and non-deductible results on derivative financial instruments of $0.5 million (2016: nil; 2015: $1.9 million).

c. Significant components of deferred taxes

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016 are as follows:


	Years ended December 31,
	2017		2016
	in thousands
Deferred tax assets:
Net operating loss carryforwards	$	73,207	$	59,468
Intangible assets		924		1,621
Property, plant and equipment		173		1,412
Deferred revenue		17,930		19,997
Accrued expenses and other current liabilities		1,657		144
Gross deferred tax asset	$	93,891	$	82,642
Less valuation allowance		(93,682)		(82,642)
Net deferred tax asset	$	209	$	—
Long-term loan to foreign operations		(209)		—
Net deferred tax liability	$	(209)	$	—
Net deferred tax asset / (liability)	$	—	$	—

Changes in the valuation allowance were as follows:


	Years ended December 31,
	2017		2016		2015
	in thousands
January 1,	$	82,642	$	65,593	$	49,997
Changes recorded in profit and loss		19,080		20,054		16,301
Changes recorded in profit and loss related to US tax reform		(1,722)		—		—
Currency translation effects		(6,318)		(3,005)		(705)
December 31,	$	93,682	$	82,642	$	65,593

The valuation allowance at December 31, 2017 was primarily related to net operating loss carryforwards that, in the judgment of management, are not more-likely than-not to be realized. Management considered projected future taxable income and tax-planning strategies in making this assessment.

In the U.S., the tax act known as the Tax Cuts and Jobs Act (“the Act”) was enacted on December 22, 2017. The Act reduces the corporate tax rate from 34% to 21%, effective January 1, 2018. As a foreign domiciled entity, the most significant impact of the Act relates to the tax rate applicable to the Company’s U.S. operating entity, resulting in a $1.7 million reduction of both the gross deferred tax asset and the valuation allowance.

According to Dutch income tax law, a tax loss carry-forward expires nine years after the end of the respective period.

The Dutch fiscal unity has as of December 31, 2017 an estimated $246.0 million (2016: $182.0 million; 2015: $137.0 million) of taxable losses that can be offset in the following nine years. The expiration dates of these Dutch losses, is summarized in the following table. In the year ended December 31, 2017 unused tax losses of $24.5 million (December 31, 2016: $0.0 million) expired.


	2018		2019	2020	2021	2022
	in thousands
Loss expiring	$	20,037	21,736	19,757	14,867	25,301

There are no unrecognized tax benefits for the years ended December 31, 2017, 2016 and 2015.