NOTES TO THE CONSOLIDATED INCOME STATEMENTS Amounts in EUR millions 30 INVESTMENT INCOME ALLOCATED TO THE NON-TECHNICAL ACCOUNT 31 CORPORATION TAX Income on investments held against shareholders’ equity does not form a part of the technical results. The amounts transferred to the non-technical account include the direct yield on allocated investments or are based on the average direct yield of the investment portfolio. The tax burden for AEGON as a group is made up of the direct and future taxes payable on profits of the units operating in the various countries. The effective tax rate for 2003 was 27% compared to 19% for 2002. The low effective tax rate in 2002 was largely due to a reduction of the deferred tax liability, favorable adjustments resulting from the filing of the 2001 corporate tax returns in the United States, lower taxable income relative to tax preferred investments and tax-exempt income in the Netherlands and the United States, and the use of tax losses in the United Kingdom. Amounts paid in cash in 2003 for income taxes totaled EUR 365 million (2002: EUR 311 million and 2001: EUR 930 million). 2003 2002 2001 Breakdown: Taxes currently due 646 583 709 Taxes deferred due to temporary differences (74) (230) 209 TOTAL 572 353 918 The following is a reconciliation of the nominal tax charge to the actual tax expense: Statutory tax rate 731 621 1,109 Increases (decreases) in taxes resulting from: — dividend income exclusions and credits (157) (181) (286) — depreciation of equipment and real estate (2) (2) (3) — valuation of technical provisions 0 0 2 — other, net 0 (85) 96 ACTUAL TAX EXPENSE 572 353 918 AEGON GROUP ANNUAL REPORT 2003 120 29 MISCELLANEOUS INCOME AND EXPENDITURE Non- Life Non-life technical Total 2003 Addition to provision for doubtful debts 484 0 5 489 Currency exchange rate differences 0 1 (12) (11) Other income and expenditure 42 32 22 96 TOTAL 526 33 15 574 2002 Addition to provision for doubtful debts 826 (1) 55 880 Currency exchange rate differences (1) 0 (13) (14) Other income and expenditure 37 45 (90) (8) TOTAL 862 44 (48) 858 2001 Addition to provision for doubtful debts 766 32 6 804 Currency exchange rate differences 1 0 (18) (17) Book gain on sale of partnership interests in Mexico (343) — — (343) Other income and expenditure (9) 4 (61) (66) TOTAL  415 36 (73) 378