6. Taxation

6. Taxation

Tax consists of current and deferred tax. Tax is recognised in the income statement and in the statement of OCI in the period in which it arises. Current tax is the tax expected to be payable on the taxable profit for the year, calculated using tax rates (and laws) enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax assets and liabilities are offset when the Company intends to settle on a net basis and a legal right of offset exists.

Deferred tax is recognised for qualifying temporary differences and for available carry forward tax losses, to the extent that the Company foresees sufficient future taxable income. Temporary differences represent the difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the reporting date. The valuation of carry forward tax losses is based on a conservative estimate of future taxable income. As TSNH is the head of Tata Steel’s Dutch fiscal unity, the Company has recognised an intercompany non-current tax receivable with the parent company to reflect its deferred tax position (Note 11).

In addition to the total taxation (credited)/charged to the income statement, an amount of €nil is charged in other comprehensive income in the year (2025: €nil). This has resulted in an effective tax rate of 2,8% (2025: 20,6%).

The total (credit)/charge for the year reconciles to the accounting profit/(loss) as follows:

As taxable income is generated across multiple jurisdictions with differing corporate income tax rates, the reported tax expense deviates from the expected amount calculated using the Dutch statutory corporate income tax rate of 25.8%. The effective tax rate is further impacted by other items, including adjustments related to prior years following final tax filings, movements in unrecognised tax losses and tax‑exempt income components. The primary driver of the reported tax result in FY2026 is the unrecognised tax credit in relation to current‑year losses, as further described in Note 11.

Pillar Two legislation has been enacted or substantively enacted in most jurisdictions in which the Group operates. Pillar Two legislation is part of the OECD/G20 international tax reform initiative and introduces a global minimum effective corporate income tax rate of 15% for large multinational enterprise groups. The rules, referred to as the Global Anti-Base Erosion (GloBE) rules, apply to groups with consolidated annual revenues of €750 million or more and are designed to ensure that such groups pay a minimum level of tax in each jurisdiction in which they operate.

Under Pillar Two, if the effective tax rate in a jurisdiction falls below the 15% minimum, a top-up tax may be imposed to bring the tax charge up to the minimum level. The group makes use of the Transitional Safe Harbour rules, which for FY2026 has a threshold of 16% ETR. The legislation is effective for the Group as of the 2025 financial year. The Group did not recognise any additional current tax expense in respect of top-up tax, as it has estimated that there is no material impact from the Pillar Two regulation in relation to the reporting period.