Note 14 - Income tax

14.1 ANALYSIS OF INCOME TAX
Income tax breaks down as follows:

  2019 2018 (*)
Current taxes (47) (95)
Deferred taxes (8) (29)
Total (55) (124)

(*) Data for 2018 restated for the full retrospective application of IFRS 16 (see note 1.1) and for the reclassification of Lagardère Sports as a discontinued operation in accordance with IFRS 5 (see note 4.3).

In 2019, the Group recorded income tax expense of €55 million, a €69 million decrease on the 2018 figure, chiefly reflecting:

  • a €83 million increase in connection with the tax charge in 2018 on the sale of an office building in the eighth arrondissement of Paris (France) that previously hosted Lagardère Active’s Radio and TV Channel teams;
  • an €11 million net decrease in tax expense relating to Lagardère Active restructuring costs;
  • a €6 million deferred tax asset arising in 2019 on restructuring costs relating to Other Activities;
  • a €6 million share of expenses and fees on gains relating to disposals carried out at Lagardère Active in 2019.

14.2 TAX PROOF
The following table reconciles income tax reported in the income statement to the theoretical income tax expense for 2019 and 2018:

  2019 2018 (*)
Profit before tax 273 318
(-) Income (loss) from equity-accounted companies (6) (3)
Profit of fully consolidated companies before tax 267 315
Theoretical tax expense(**) (92) (108)
Effect on theoretical tax expense of:    
Different tax bases for capital gains and losses(***) 40 (15)
Different tax bases for impairment losses on goodwill and other intangible assets (10) (13)
Different tax rates on earnings of foreign subsidiaries 13 12
Tax credits and tax incentives 3 10
Limitation on deferred taxes (3) (5)
Effect of changes in tax rates on deferred taxes (3) (1)
Tax loss carryforwards used (recognised) in the year(****) (8) -
Impact of deferred tax asset recognised on tax loss carryforwards - -
Impact of discontinued operations 8 (2)
Permanent differences and other items (3) (2)
Effective income tax expense (55) (124)

(*) Data for 2018 restated for the full retrospective application of IFRS 16 (see note 1.1) and for the reclassification of Lagardère Sports as a discontinued operation in accordance with IFRS 5 (see note 4.3).
(**) Calculated at the French standard rate (34.43% in both 2019 and 2018).
(***) Differences between disposal gains for tax purposes and book disposal gains.
(****) Tax losses for which no deferred tax assets were recognised.

14.3 DEFERRED TAXES RECOGNISED IN THE BALANCE SHEET
Deferred taxes recognised at 31 December 2019 and 2018 concerned the following assets and liabilities:

  31 Dec 2019 31 Dec 2018(*)
Intangible assets (252) (198)
Property, plant and equipment (12) (13)
Non-current financial assets (4) (13)
Inventories 18 17
Provisions for pension benefit obligations 22 31
Right-of-use assets and lease liabilities 55 47
Other provisions 68 66
Other working capital items 118 117
Temporary differences (gross amount) 13 54
Write-down of deferred tax assets (132) (138)
Temporary differences (net amount) (119) (84)
Tax loss carryforwards 51 55
Tax credits - -
Net deferred tax asset (liability) (68) (29)
Deferred tax assets 210 215
Deferred tax liabilities (278) (244)

(*) Data at 31 December 2018 restated for the full retrospective application of IFRS 16 (see note 1.1).

Tax loss carryforwards were available to the Group at 31 December 2019. The main amounts concern the French tax group headed by Lagardère SCA, which has tax loss carry forwards (tax basis) of more than €160 million.

14.4 CHANGES IN DEFERRED TAXES

  2019 2018 (*)
Net deferred tax asset (liability) at 1 January (29) 17
Income tax expense recognised in the income statement (8) (29)
Deferred tax recognised directly in equity 8 (2)
Reclassification as assets held for sale and associated liabilities - -
Net cash from (used in) discontinued operations (4) 2
Effect of change in scope of consolidation and exchange rates (35) (17)
Net deferred tax asset (liability) at 31 December (68) (29)

(*) Data for 2018 restated for the full retrospective application of IFRS 16 (see note 1.1) and for the reclassification of Lagardère Sports as a discontinued operation in accordance with IFRS 5 (see note 4.3).

The negative €35 million impact in 2019 of changes in scope of consolidation and exchange rates was mainly attributable to the acquisition of the IDF group (see note 4.2).
The deferred income tax expense shown in the 2018 income statement mainly reflects the reversal of deferred tax assets on tax loss carryforwards in France amounting to €40 million, in connection with the utilisation of €116 million in loss carryforwards relating to the sale by Lagardère Active of an office building in the eighth arrondissement of Paris.

Deferred taxes recognised directly in equity can be analysed as follows:

  31 Dec. 2019 31 Dec. 2018(*)
Investments in non-consolidated companies - -
Cash flow hedges 1 (4)
Actuarial gains and losses on pensions and other post-employment
benefit obligations		 24 21
Total 25 17

(*) Data at 31 December 2018 restated for the full retrospective application of IFRS 16 (see note 1.1).