14. Income taxes - €836 million

   

Millions of euro

   
 

2019

2018

Change

Current taxes

2,137

2,014

123

6.1%

Adjustments for income taxes relating to prior years

(132)

(150)

18

-12.0%

Total current taxes

2,005

1,864

141

7.6%

Deferred tax expense

(567)

92

(659)

-

Deferred tax income

(602)

(105)

(497)

-

TOTAL

836

1,851

(1,015)

-54.8%

 

The decrease in income taxes in 2019 compared with the previous year is essentially due to the reduction in income.

In percentage terms, the tax burden has decreased due, in particular, to:

  • 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.

These effects were partially offset by recognition in the previous year of the following:

  • greater deferred tax assets on past losses by Enel Distribuição Goiás as a result of the efficiency improvement measures implemented by the Group subsequent to the acquisition (€274 million);
  • a decrease in income taxes in Italy for the recognition of deferred tax assets (€85 million) for the past losses of 3Sun following the merger with Enel Green Power SpA;
  • a reduction in deferred tax liabilities (€61 million) following the tax reform in Colombia, which led to a reduction in progressive tax rates from 33% to 30%.

For more information on changes in deferred tax assets and liabilities, see note 22.
The following table provides a reconciliation of the theoretical tax rate and the effective tax rate.

Millions of euro

    
 

2019

 

2018

 

Income before taxes

4,312

 

8,201

 

Theoretical taxes

1,035

24.0%

1,968

24.0%

Change in tax effect on impairment losses, capital gains and negative goodwill

93

 

(180)

 

Reversal of deferred taxes in Brazil

(494)

 

-

 

Recognition of deferred tax assets on past losses in Brazil

-

 

(274)

 

Recognition of deferred tax assets on past losses in Italy

-

 

(86)

 

Change in tax effect on Kino gain and other items in Mexico

-

 

100

 

Impact on deferred taxation of changes in tax rates

(33)

 

(61)

 

Patent box mechanism in Italy

(50)

 

-

 

Remeasurement for tax purposes of certain assets in Argentina

(35)

 

-

 

IRAP

235

 

237

 

Other differences, effect of different tax rates abroad compared with the theoretical rate in Italy, and other minor items

85

147

Total

836

1,851