Income tax expense for the year includes current taxes and deferred taxes. It includes the contribution on the added value of companies (cotisation sur la valeur ajoutée des entreprises (CVAE)), a business tax assessed on corporate value-added generated by French subsidiaries, which is reported under income tax expense as 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 are always refunded by tax authorities if they have not been deducted from corporate income tax are recognized as subsidies and therefore presented as a reduction to the expenses to which they relate.
Uncertain income tax positions are estimated in accordance with IFRIC 23 “Uncertainty over income tax treatments”. 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). Uncertain tax positions balances are presented as current or deferred tax assets or liabilities in Income tax payable.
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 (see note 11).
Deferred tax assets on temporary differences and tax loss carry-forwards are only recognized if their recoverability is considered probable, considering existing temporary differences giving rise to deferred tax liabilities expected to reverse and taxable profits that will be available in the foreseeable future and against which the temporary difference can be utilized. When assessing the probability of a taxable profit being available in the foreseeable future, account is taken, primarily, of prior years’ results, forecasted future results based on a business plan performed at the level of each taxable entity, non-recurring items unlikely to occur in the future and the tax strategy.
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 million euros) | FISCAL 2023 | FISCAL 2022 IFRS 5 restated |
|---|---|---|
| Current income tax (expenses)/income | Current income tax (expenses)/income FISCAL 2023 (151) |
Current income tax (expenses)/income FISCAL 2022 IFRS 5 restated(163) |
| Withholding taxes | Withholding taxes FISCAL 2023 (10) |
Withholding taxes FISCAL 2022 IFRS 5 restated(6) |
| Deferred income tax (expenses)/income | Deferred income tax (expenses)/income FISCAL 2023 (20) |
Deferred income tax (expenses)/income FISCAL 2022 IFRS 5 restated(38) |
| INCOME TAX EXPENSE | INCOME TAX EXPENSE FISCAL 2023 (181) |
INCOME TAX EXPENSE FISCAL 2022 IFRS 5 restated(206) |
As of Fiscal 2023, the change in deferred income tax expense corresponds to the reversal of deferred tax assets and the non-recognition of deferred tax assets previously recognized in new countries impacted by losses.
Based on the preliminary work performed, the Group does not expect any significant impact from the Pillar 2 reform on its consolidated financial statements.
