L'Oréal - 2018 Registration Document

4 2018 Consolidated Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Deferred taxes in the balance sheet 6.3. The net change in deferred taxes (assets and liabilities) can be analysed as follows:

€ millions Balance of deferred tax assets at 31 December 2015 Balance of deferred tax liabilities at 31 December 2015 Income statement impact (including The Body Shop)

547.9 -876.8 -79.8 17.5 96.7 548.3 -842.9 197.2

Translation differences

Other effects (1)

Balance of deferred tax assets at 31 December 2016 Balance of deferred tax liabilities at 31 December 2016 Income statement impact (including The Body Shop)

Translation differences

12.7 18.0

Other effects (1)

Balance of deferred tax assets at 31 December 2017 Balance of deferred tax liabilities at 31 December 2017

530.3 -597.0

Income statement impact Translation differences

-43.0 -19.0 27.8

Other effects (1)

BALANCE OF DEFERRED TAX ASSETS AT 31 DECEMBER 2018 BALANCE OF DEFERRED TAX LIABILITIES AT 31 DECEMBER 2018

572.7

-673.7 Including mainly the deferred tax impact of currency hedging instruments recognised in equity, as well as the tax effect on actuarial gains and losses recognised in equity. (1) 2017 and 2016 also take into account the impact of a decrease in the tax rate in France on the Group's stake in Sanofi for €16.6 million and €33 million, respectively, and, in 2017, the impact of the decrease in the rate on deferred taxes in the USA on currency hedges and an actuarial difference amounting to €26 million, as well as the impact of the sale of The Body Shop for €79 million.

Deferred tax assets and liabilities recorded in the balance sheet may be broken down as follows:

31.12.2018 Deferred tax liabilities

31.12.2017 Deferred tax liabilities

31.12.2016 Deferred tax liabilities

Deferred tax assets

Deferred tax assets

Deferred tax assets

€ millions

Temporary differences

562.4

409.6 264.1

520.3

346.9 250.1

536.4

542.0 300.9

Deferred tax liabilities on revaluation of Sanofi

Tax credits and tax loss carry-forwards

10.3

10.0

11.9

DEFERRED TAX TOTAL

572.7

673.7

530.3

597.0

548.3

842.9

Deferred tax assets on temporary differences mainly relate to provisions for pensions and early retirement (€113.0 million, €77.2 million and €211.3 million respectively at the end of 2018, 2017 and 2016) and provisions for liabilities and charges (€113.1 million, €138.9 million and €153.4 million at the end of 2018, 2017 and 2016).

Deferred tax liabilities on temporary differences mainly relate to intangible assets acquired in the context of business combinations other than non-tax-deductible goodwill. Deferred tax assets whose recovery is not considered probable are not recorded in the financial statements; such assets amount to €21.6 million at 31 December 2018 compared with €35.5 million at 31 December 2017 and €102.5 million at 31 December 2016.

REGISTRATION DOCUMENT / L'ORÉAL 2018

266