Other financial income and expenses comprise:
| (in millions of euros) | 2020 | 2019 |
|---|---|---|
| Financial income on cash and cash equivalents | Financial income on cash and cash equivalents 202035 | Financial income on cash and cash equivalents 201917 |
| Gains/(losses) on other financial assets (including loans and financial receivables) | Gains/(losses) on other financial assets (including loans and financial receivables) 2020181 | Gains/(losses) on other financial assets (including loans and financial receivables) 2019248 |
| Gains/(losses) on debt and equity securities | Gains/(losses) on debt and equity securities 2020691 | Gains/(losses) on debt and equity securities 2019878 |
| Changes in financial instruments carried at fair value through profit and loss | Changes in financial instruments carried at fair value through profit and loss 20201,253 | Changes in financial instruments carried at fair value through profit and loss 20192,338 |
| Other financial expenses | Other financial expenses 2020(102) | Other financial expenses 2019(134) |
| Foreign exchange gain/loss on financial items other than debts | Foreign exchange gain/loss on financial items other than debts 2020(254) | Foreign exchange gain/loss on financial items other than debts 2019(7) |
| Return on fund assets | Return on fund assets 2020378 | Return on fund assets 2019523 |
| Capitalised borrowing costs | Capitalised borrowing costs 2020579 | Capitalised borrowing costs 2019740 |
| OTHER FINANCIAL INCOME AND EXPENSES | OTHER FINANCIAL INCOME AND EXPENSES20202,761 | OTHER FINANCIAL INCOME AND EXPENSES20194,603 |
*Restated for the impacts of IFRS 5 due to the change in scope of E&P operations finalised (see note 1.4.2).
“Gains/(losses) on debt and equity securities” in 2020 principally include:
Other financial income and expenses include changes in fair value on financial instruments, amounting to €1,253 million. With the high market volatility, notably caused by the Covid-19 pandemic, this favourable overall change for the year was driven by a €1,214 million increase in the fair value of debt and equity securities(including €1,218 million relating to dedicated assets) and a €39 million increase in the fair value of derivatives. In 2019, changes in financial instruments carried at fair value through profit and loss amounted to €2,338 million, including €2,545 million relating to dedicated assets.
The decrease in capitalised borrowing costs relates to the suspension of capitalisation of interim interest relating to Flamanville 3 between March and July (see note 1.4.1.3).
Income taxes include the current tax expense (income) and the deferred tax expense (income), calculated under the tax legislation in force in the countries where earnings are taxable.
In compliance with IAS 12, current and deferred taxes are generally recorded in the income statement or in equity symmetrically to the underlying operation.
Under IAS 32, income taxes on distributions to holders of equity instruments(notably dividends and the remuneration paid to holders of perpetual subordinated bonds) must be recognised in accordance with IAS 12. The Group considers that these distributions are paid out of previous years’ accumulated profits and as a result the associated tax effects are included in the net income for the period.
In application of IFRIC 23, a tax asset or liability is recognised when there is uncertainty over income tax treatments. If the Group considers it likely that the tax authorities will not accept its chosen treatment, it recognises a tax liability, and if it considers it likely that the tax authorities will reimburse a tax that has already been paid, it recognises a tax asset. The tax assets and liabilities relating to these uncertainties are estimated on a case-by-case basis and stated at the most likely amount, or the weighted average of the various outcomes considered. These tax assets and liabilities are included in deferred taxes.
The current tax expense (income) is the estimated amount of tax due on the taxable income for the period, calculated using the tax rates adopted at the year-end.
Deferred taxes result from temporary differences between the book value of assets and liabilities and their tax basis. No deferred taxes are recognised for temporary differences generated by:
Deferred tax assets and liabilities are valued at the expected tax rate for the period in which the asset will be realised or the liability extinguished, based on tax rates adopted at the year-end. If the tax rate changes, deferred taxes a readjusted to the new rate and the adjustment is recorded in the income statement, unless it relates to an underlying for which changes in value are recorded in equity, for example in accounting for actuarial gains and losses or fair value on hedging instruments and debt or equity securities.
Deferred taxes are reviewed at each closing date, to take into account changes in tax legislation and the prospects for recovery of deductible temporary differences. Deferred tax assets are only recognised when it is probable that the Group will have sufficient taxable profit to utilise the benefit of the asset in the foreseeable future, or beyond that horizon, if there are deferred tax liabilities with the same maturity.
Deferred tax assets and liabilities are reported on a net basis, determined at the level of a tax entity or tax group.
