The income tax charge includes the current tax expense payable by each consolidated tax entity and the deferred tax expense. Deferred tax is calculated whenever there are temporary differences between the tax basis of assets and liabilities and their basis for consolidated accounting purposes, using the balance sheet liability method.
The restatement of assets and liabilities relating to lease contracts results in the booking of deferred tax.
Deferred tax includes irrecoverable taxation on estimated or confirmed dividends.
Deferred tax is measured using the tax rate enacted at the closing date and which will also apply when the temporary differences reverse.
Deferred tax assets generated by tax loss carry forwards are only recognised to the extent it is probable that the entities will be able to generate taxable profit against which they can be utilised.
Under the French system of tax consolidation, the taxable profits of some French companies are offset when determining the overall tax charge, which is payable only by L’Oréal, the parent company of the tax Group. Tax consolidation systems also exist outside France.
Uncertain tax positions are recorded in the balance sheet under Non-current tax liabilities. These correspond to an estimate of tax risks and litigation related to income tax for the various countries in which the Group operates.
| € millions | 2022 | 2021 | 2020 |
|---|---|---|---|
| Current tax | Current tax 20221,995.9 |
Current tax 20211,361.7 |
Current tax 20201,219.9 |
| Deferred tax | Deferred tax 2022-96.5 |
Deferred tax 202183.6 |
Deferred tax 2020-10.1 |
| INCOME TAX | INCOME TAX20221,899.4 | INCOME TAX20211,445.4 | INCOME TAX20201,209.8 |
The income tax charge may be analysed as follows:
| € millions | 2022 | 2021 | 2020 |
|---|---|---|---|
| Profit from continuing operations before tax and associates | Profit from continuing operations before tax and associates20227,610.6 | Profit from continuing operations before tax and associates20216,046.9 | Profit from continuing operations before tax and associates20204,776.5 |
| Theoretical tax rate | Theoretical tax rate 202224.36% |
Theoretical tax rate 202124.72% |
Theoretical tax rate 202026.37% |
| Expected tax charge | Expected tax charge20221,853.9 | Expected tax charge20211,494.8 | Expected tax charge20201,259.7 |
| Impact of permanent differences | Impact of permanent differences 2022102.7 |
Impact of permanent differences 202117.3 |
Impact of permanent differences 202031.4 |
| Impact of tax rate differences | Impact of tax rate differences 2022-154.0 |
Impact of tax rate differences 2021-74.3 |
Impact of tax rate differences 2020-129.9 |
| Change in unrecognised deferred taxes | Change in unrecognised deferred taxes 20224.1 |
Change in unrecognised deferred taxes 20213.5 |
Change in unrecognised deferred taxes 20201.7 |
| Effect of non-current tax liabilities | Effect of non-current tax liabilities 202217.3 |
Effect of non-current tax liabilities 2021-11.9 |
Effect of non-current tax liabilities 2020108.2 |
| Other(1) | Other (1)202275.4 |
Other (1)202116.0 |
Other (1)2020-61.3 |
| GROUP TAX CHARGE | GROUP TAX CHARGE20221,899.4 | GROUP TAX CHARGE20211,445.4 | GROUP TAX CHARGE20201,209.8 |
(1) Including tax credits and taxes on dividend distributions.
The expected tax charge reflects the sum of pre-tax profit for each country, multiplied by the normal taxation rate. The theoretical tax rate reflects the total expected tax charge as a percentage of pre-tax profit.
The impact of any reduced tax rates existing in certain countries in addition to the normal tax rates is included on the line Impact of tax rate differences.
