UPDATE 1-KPN's $4.9 bln loss on E-Plus sale to cut tax bill

Mon Sep 16, 2013 4:44am EDT

* Book loss for Dutch tax purposes of 3.7 bln euros

* Dutch standard corporate tax rate 25 pct

* KPN paid 270 mln euros of tax overall in 2012

BRUSSELS, Sept 16 (Reuters) - Dutch telecoms group KPN has struck a deal with Dutch tax authorities to book a loss of about 3.7 billion euros ($4.9 billion) on the sale of German unit E-Plus, which it can offset against taxable income in coming years to reduce its tax bill.

KPN, the subject of a takeover bid from Mexico's America Movil, said on Monday it expected to be able to start offsetting the loss against its taxable income from 2014.

The figure is greater than the 1.3 billion euro loss that KPN will book in its own accounts related to the sale.

The Dutch group agreed last month to sell E-Plus to Telefonica Deutschland in a cash and shares deal that will see it take on a stake of 20.5 percent in the purchaser.

KPN said dividends received or capital gains realised on that shareholding would be subject to Dutch corporation tax, and therefore also able to be offset against the book loss.

Based on the standard Dutch corporation tax rate of 25 percent, the book loss of 3.7 billion euro would give a potential tax benefit of 925 million euros for KPN, equivalent to 0.22 euros per KPN share.

Using the overall tax paid by the Dutch group recently, that could last it for about four years.

KPN paid 270 million euros in taxes in 2012 and 222 million euros in 2011. Some of this would have been paid in Belgium, related to its BASE mobile business there.

KPN also benefits from an agreement with Dutch tax authorities under which profits attributable to innovation are taxed at 5 percent, meaning its effective tax rate is about 20 percent.

KPN shares were up 0.7 percent at 2.34 euros at 0755 GMT, while the STOXX 600 European telecoms index was 0.3 percent stronger.

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