15. Income taxes - €1,841 million

 

Millions of euro      
  2020 2019 Change
Current taxes 1,898 2,137 (239) -11.2%
Adjustments for income taxes relating to prior years (168) (132) (36) -27.3%
Total current taxes 1,730 2,005 (275) -13.7%
Deferred tax expense 180 (567) 747 -
Deferred tax income (69) (602) 533 -88.5%
TOTAL 1,841 836 1,005 -


The increase in taxes in 2020 compared with the previous year is essentially attributable to the deferred tax assets associated with the effect of the impairment losses connected with the decarbonization process recognized in 2019, while the impairment losses on certain assets of Slovenské elektrárne and the impairment loss on the Enel Produzione’s financial assets from EP Slovakia BV for the sale of that holding essentially did not give rise to deferred tax assets.
In addition, the tax burden increased in reflection of the following factors from the previous year:

  • the release of €494 million in deferred taxes by Enel Distribuição São Paulo following the merger with Enel Brasil Investimentos Sudeste SA (Enel Sudeste);
  • the agreement with the tax authorities concerning the “patent box” option, which provides for preferential taxation of earnings resulting from the use of intellectual property (€53 million);
  • a decrease in taxes (in the amount of €35 million) recognized in Argentina by the generation companies Enel Generación Costanera and Central Dock Sud as a result of exercising the revalúo impositivo option for tax incentives. In return for payment of a tax in lieu, this mechanism allows the remeasurement of certain assets for tax purposes, resulting in the recognition of deferred tax assets and the greater deductibility of future depreciation;
  • the reversal of deferred tax liabilities by EGPNA as an ancillary effect of the acquisition of a number of companies from EGPNA REP;
  • the deductibility of goodwill resulting from the merger of GasAtacama into Enel Generación Chile.

For more information on changes in deferred tax assets and liabilities, see note 23.
The following table provides a reconciliation of the theoretical tax rate and the effective tax rate.

Millions of euro        
  2020   2019  
Pre-tax profit 5,463   4,312  
Theoretical taxes 1,311 24.0% 1,035 24.0%
Change in tax effect on impairment losses, capital gains and negative goodwill 202   93  
Reversal of deferred taxes in Brazil -   (494)  
Net effect on deferred taxation recognized with timing mismatch 16   -  
Impact on deferred taxation of changes in tax rates -   (33)  
Patent box mechanism in Italy -   (53)  
Remeasurement for tax purposes of certain assets in Argentina -   (35)  
IRAP 249   235  
Other differences, effect of different tax rates abroad compared with the theoretical rate in Italy, and other minor items 63   88  
Total 1,841   836