Income tax is computed in accordance with the tax legislation in force in the countries where the income is taxable.
In accordance with IAS 12, deferred tax is recognised on the temporary differences between the carrying amount and the tax base of assets and liabilities. It is calculated using the latest tax rates enacted or substantively enacted at the accounts closing date. The effects of a change in the tax rate from one period to another are recognised in the income statement in the period in which the change was decided, except where they relate to transactions recognised under other comprehensive income or directly in equity.
Deferred tax relating to share-based payments is taken to income to the extent that the deductible amount does not exceed the fair value of plans established according to IFRS 2.
Whenever subsidiaries have distributable reserves, a deferred tax liability is recognised in respect of the probable distributions that will be made in the foreseeable future. Moreover, shareholdings in associates and certain joint ventures give rise to recognition of a deferred tax liability in the event of differences between the carrying amount and the tax base of the shares.
Net deferred tax is determined on the basis of the tax position of each entity or group of entities included in the tax group under consideration and is shown under assets or liabilities for its net amount per tax group. Deferred tax is reviewed at each balance sheet date to take account of the impact of changes in tax law and the prospect of recovery. Deferred tax assets are only recognised if their recovery is probable.
Deferred tax assets and liabilities are not discounted.
| (in € millions) | 2022 | 2021 |
|---|---|---|
| Current tax | Current tax 2022(1,809) |
Current tax 2021 (1,509) |
| Deferred tax | Deferred tax 202272 |
Deferred tax 2021 (116) |
| of which temporary differences | of which temporary differences2022102 | of which temporary differences 2021 (214) |
| of which tax loss carryforwards | of which tax loss carryforwards2022(29) | of which tax loss carryforwards 2021 98 |
| Total | Total2022(1,737) | Total 2021 (1,625) |
The net tax expense for the period comprises:
The Group’s effective tax rate was 28.3% in 2022 compared with 42.7% in 2021 (32.5% excluding the non-recurring impact of the increase in the UK corporation tax rate from 19% to 25%). In 2022, the effective tax rate was 26.5% in France and 31.6% outside France.
The Group’s effective tax rate for 2022 was higher than the theoretical tax rate of 25.83% in force in France, because of permanent differences and net changes in deferred tax assets and deferred tax liabilities. The difference between the tax calculated using the standard tax rate in force in France and the amount of tax effectively recognised in the year can be analysed as follows:
| (in € millions) | 2022 | 2021 |
|---|---|---|
| Income before tax and profit/(loss) of companies accounted for under the equity method | Income before tax and profit/(loss) of companies accounted for under the equity method 20226,131 |
Income before tax and profit/(loss) of companies accounted for under the equity method 2021 3,808 |
| Theoretical tax rate in France | Theoretical tax rate in France 202225.8% |
Theoretical tax rate in France 2021 27.4% |
| Theoretical tax expense expected | Theoretical tax expense expected2022(1,584) | Theoretical tax expense expected 2021 (1,042) |
| Tax rate differential on foreign income | Tax rate differential on foreign income 2022(2) |
Tax rate differential on foreign income 2021 (403) |
| of which impact from revaluing deferred tax in the United Kingdom | of which impact from revaluing deferred tax in the United Kingdom2022- | of which impact from revaluing deferred tax in the United Kingdom 2021 (387) |
| Impact of tax loss carryforwards and other temporary differences that are not recognised or that have previously been subject to limitation | Impact of tax loss carryforwards and other temporary differences that are not recognised or that have previously been subject to limitation 2022(96) |
Impact of tax loss carryforwards and other temporary differences that are not recognised or that have previously been subject to limitation 2021 (40) |
| Goodwill impairment losses | Goodwill impairment losses 2022– |
Goodwill impairment losses 2021 (5) |
| Permanent differences and other | Permanent differences and other 2022(56) |
Permanent differences and other 2021 (134) |
| Tax expense recognised | Tax expense recognised2022(1,737) | Tax expense recognised 2021 (1,625) |
| Effective tax rate (*) | Effective tax rate (*)202228.3% | Effective tax rate (*) 2021 42.7% |
(*) Excluding the Group’s share of companies accounted for under the equity method.
