The rule in plain words
The Amount/estimate of Loss-absorbing capacity of deferred taxes should be equal to the sum of items "Amount/estimate of LAC DT justified by reversion of deferred tax liabilities", "Amount/estimate of LAC DT justified by reference to probable future taxable profit", "Amount/estimate of AC DT justified by carry back, current year", "Amount/estimate of LAC DT justified by carry back, future years"
The headline gives only the template and the kind of check, because the rule is too long to say in a headline. The plain words above say all of it.
What to do if your return fails it
- 01Open the tables below and find the cells the rule reads.
- 02Add up the parts in your return and compare the result with the total.
- 03If they differ, a part is missing, a value sits in the wrong cell, or the total is out of date.
- 04EIOPA allows a small rounding difference, worked out from the decimals each value is reported with.
- 05It runs only when your filing indicators mark S.25.01 as reported.
- 06This is a warning. It does not stop the return on its own, but your supervisor may ask you to explain it.
The cells it reads
Solvency capital requirement - for undertakings on standard formula: calculation of solvency capital requirement (S.25.01.01.02)
Row
- R0150Loss-absorbing capacity of deferred taxes
Column
- C0100Value
Solvency capital requirement - for undertakings on standard formula: calculation of loss absorbing capacity of deferred taxes (S.25.01.01.05)
Rows
- R0650LAC DT justified by reversion of deferred tax liabilities
- R0660LAC DT justified by reference to probable future taxable economic profit
- R0670LAC DT justified by carry back, current year
- R0680LAC DT justified by carry back, future years
Column
- C0130LAC DT
Which returns it applies to
Line4 Check runs it on annual solo (ARS) and annual branch (ARB) returns on EIOPA taxonomy 2.10.0. EIOPA applies it to annual ECB solo (AES), annual ECB branch (AEB), annual solo (ARS) and annual branch (ARB) returns, as a warning.
EIOPA’s own words and formula
The plain words above are EIOPA’s own, word for word, from its list of validations.
Show the formulaShowHide
EIOPA's formula. Cells are written as {t: table, r: row, c: column}.
{t: S.25.01.01.05, r: R0640, c: C0130, z: Z0001} = sum({t: S.25.01.01.05, r: R0650; R0660; R0670; R0680, c: C0130, z: Z0001})Other rules on Solvency capital requirement - for undertakings on standard formula (S.25.01)
- Solvency capital requirement - for undertakings on standard formula and solvency capital requirement - for undertakings using an internal model (partial or full): a conditional check (BV1074)
- Solvency capital requirement - for undertakings on standard formula and solvency capital requirement - for undertakings using an internal model (partial or full): a conditional check (BV1076)
- Solvency capital requirement - for undertakings on standard formula: rows R0600 to R0690 are not applicable when LAC DT is not used (BV1078)
- Solvency capital requirement - for undertakings on standard formula and solvency capital requirement - for undertakings using an internal model (partial or full): a conditional check (BV1080)
- Solvency capital requirement - for undertakings on standard formula and solvency capital requirement - for undertakings using an internal model (partial or full): a total must equal the sum of its parts (BV1086)
- Solvency capital requirement - for undertakings on standard formula and solvency capital requirement - for undertakings using an internal model (partial or full): a total must equal the sum of its parts (BV1088)
- Solvency capital requirement - for undertakings on standard formula and solvency capital requirement - market risk: a total must equal the sum of its parts (BV1157)
- Solvency capital requirement - for undertakings on standard formula: a total must equal the sum of its parts (BV1773)
Every Solvency II rule on S.25.01
Checks like this one, run at the point of submission, are the first step to real-time supervision. Line4 builds SupTech software for financial regulators that runs checks like these as each return arrives.