Universal Registration Document 2022

9.2 Reconciliation of the theoretical and effective tax expense (tax proof)

(in millions of euros)	2022	2021
Income of consolidated companies before tax	Income of consolidated companies before tax 2022 (22,916)	Income of consolidated companies before tax 2021 5,585
Income tax rate applicable to the parent company	Income tax rate applicable to the parent company 2022 25.82%	Income tax rate applicable to the parent company 2021 28.41%
Theoretical tax expense	Theoretical tax expense 2022 5,917	Theoretical tax expense 2021 (1,587)
Differences in tax rate ⁽¹⁾	Differences in tax rate ⁽¹⁾ 2022 145	Differences in tax rate ⁽¹⁾ 2021 (349)
Permanent differences ⁽²⁾	Permanent differences ⁽²⁾ 2022 (336)	Permanent differences ⁽²⁾ 2021 (160)
Taxes without basis ⁽³⁾	Taxes without basis ⁽³⁾ 2022 (478)	Taxes without basis ⁽³⁾ 2021 727
Unrecognised deferred tax assets ⁽⁴⁾	Unrecognised deferred tax assets ⁽⁴⁾ 2022 (1,320)	Unrecognised deferred tax assets ⁽⁴⁾ 2021 (36)
Other	Other 2022 (2)	Other 2021 5
ACTUAL TAX EXPENSE	ACTUAL TAX EXPENSE 2022 3,926	ACTUAL TAX EXPENSE 2021 (1,400)
EFFECTIVE TAX RATE	EFFECTIVE TAX RATE 2022 17.13%	EFFECTIVE TAX RATE 2021 25.09%

The tax income amounts to €3,926 million in 2022, corresponding to an effective tax rate of 17.13% (compared to a tax expense of €(1,400) million in 2021, corresponding to an effective tax rate of 25.09%).

The €5,326 million change between the tax expense for 2021 and the tax income in 2022 essentially reflects the €28,051 million decrease in the Group’s pre-tax income, generating additional tax income of €7,359 million.

The tax income also reflects the unfavourable effect of certain rulings in tax disputes in 2022 (see note 17.3.1), the introduction in Italy of “windfall taxes” on electricity-producing companies, impairment recognised during the year and the absence of any favourable effect equivalent to the impact of asset revaluations for tax purposes in Italy in 2021.

In addition, it includes the unfavourable effect of non-recognition of deferred tax assets in France, partly offset by the favourable effect of deferred tax assets recognised in the United States.

Contrary to 2021, the Group was not affected by any rise in the normative tax rate in the countries where it does business.

After elimination of these non-recurring items (principally impairment, unrealised gains and losses on financial assets and commodities, and tax disputes), the effective current tax rate for 2022 is 18.0%, compared to 21.3% in 2021.

The main factors explaining the difference between the theoretical tax rate and this effective rate are:

2022:
- ⁽¹⁾ the favourable impact of tax rate differences amounting to €145 million, mainly relating to the United Kingdom where the normative tax rate applicable in 2022 is 19%,
- ⁽²⁾ provisions and impairment amounting to €(279) million,
- ⁽³⁾ the unfavourable impact of “windfall” taxes in Italy (€(317) million), and tax litigation (€(346) million), partly offset by the favourable impact of deduction of the payments made to bearers of perpetual subordinated bonds, amounting to €156 million,
- ⁽⁴⁾ the effect of non-recognition of deferred tax assets, amounting to €(1,320) million including €(1,551) million relating to the French tax group (see note 9.4), partly offset by the favourable effect of deferred tax assets recognised in the United States, amounting to €296 million;
2021:
- ⁽¹⁾ the unfavourable impact of tax rate differences amounting to €359 million, due to the forthcoming increase in the UK’s normative rate from 19% to 25% from 2023,
- ⁽³⁾ the favourable impact of asset restatements for tax purposes in Italy (amounting to €422 million) and deduction of payments made to bearers of perpetual subordinated bonds (amounting to €157 million),
- ⁽⁴⁾ the effect of non-recognition of deferred tax assets, amounting to €(36) million, including €(309) million of deferred taxes recognised during the year following restatements of the tax value of assets in Italy, partly offset by the favourable effect of deferred tax assets recognised in the United States (€191 million).

9.3 Change in deferred tax assets and liabilities

(in millions of euros)	2022	2021
Deferred tax assets	Deferred tax assets 2022 1,667	Deferred tax assets 2021 1,150
Deferred tax liabilities	Deferred tax liabilities 2022 (2,401)	Deferred tax liabilities 2021 (3,115)
Net deferred taxes at 1 January	Net deferred taxes at 1 January 2022 (734)	Net deferred taxes at 1 January 2021 (1,965)
Change in net income	Change in net income 2022 5,820	Change in net income 2021 616
Change in equity	Change in equity 2022 2,323	Change in equity 2021 694
Translation adjustments	Translation adjustments 2022 79	Translation adjustments 2021 (93)
Changes in scope of consolidation	Changes in scope of consolidation 2022 13	Changes in scope of consolidation 2021 28
Other movements	Other movements 2022 (338)	Other movements 2021 (14)
NET DEFERRED TAXES AT 31 DECEMBER	NET DEFERRED TAXES AT 31 DECEMBER 2022 7,163	NET DEFERRED TAXES AT 31 DECEMBER 2021 (734)
Deferred tax assets	Deferred tax assets 2022 8,696	Deferred tax assets 2021 1,667
Deferred tax liabilities	Deferred tax liabilities 2022 (1,533)	Deferred tax liabilities 2021 (2,401)

In 2022, the change in deferred taxes in equity includes €558 million of actuarial gains and losses on post-employment benefits (€(510) million in 2021) and €1,181 million of changes in the fair value of hedges (€(1,223) million in 2021).

Universal Registration Document 2022

Introduction

9.2 Reconciliation of the theoretical and effective tax expense (tax proof)

9.3 Change in deferred tax assets and liabilities