Income tax expense for the year includes current taxes and deferred taxes. It includes the cotisation sur la valeur ajoutée des entreprises (CVAE), a business tax assessed on corporate value-added generated by the French subsidiaries, which is reported under income tax expense because the Group considers that it meets the definition of a tax on income contained in IAS 12 “Income Tax”.
Tax credits which do not affect taxable profit and which are always refunded by the French government if they have not been deducted from corporate income tax (including the Competitiveness and Employment Tax Credit (CICE) introduced in France under the third amended 2012 Finance Bill) are recognized as subsidies and therefore deducted from the expenses to which they relate.
Uncertain income tax liabilities related to tax positions are estimated in accordance with IFRIC 23 “Uncertainty over income tax treatments” and presented in Income tax payable. The accounting for uncertain tax treatments requires an entity to make estimates and judgments about whether the relevant taxation authority will accept the position taken by the entity in its tax filings (most likely amount or expected value corresponding to the probability-weighted average of the possible outcomes).
Deferred taxes are recognized on temporary differences between the carrying amount of an asset or liability and its tax base, using the tax rate that is expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that are enacted or substantially enacted at the period end.
Deferred taxes are not recognized on the following items:
Taxes on items recognized directly in shareholders’ equity or in other comprehensive income are recognized in shareholders’ equity or in other comprehensive income, respectively, and not in the income statement.
Residual deferred tax assets on temporary differences and tax loss carry-forwards (after offset of deferred tax liabilities) are only recognized if their recovery is considered probable.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to set off current tax assets and liabilities and the deferred taxes relate to the same taxable entity and tax authority.
| (in millions of euro) | FISCAL 2021 | FISCAL 2020 |
|---|---|---|
| Current income tax (expenses)/income | Current income tax (expenses)/income FISCAL 2021(107) |
Current income tax (expenses)/income FISCAL 2020(185) |
| Withholding taxes | Withholding taxes FISCAL 2021(7) |
Withholding taxes FISCAL 2020(1) |
| Deferred income tax (expenses)/income | Deferred income tax (expenses)/income FISCAL 202114 |
Deferred income tax (expenses)/income FISCAL 202088 |
| INCOME TAX EXPENSE | INCOME TAX EXPENSEFISCAL 2021(101) | INCOME TAX EXPENSEFISCAL 2020(98) |
As of Fiscal 2021 , the change in deferred income tax income corresponds to deferred tax assets recognized in countries impacted by non-recurring losses relating to assets impairments and restructuring costs.
