L'Oréal - 2018 Registration Document

5 Parent company financial statements

NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

Income tax

NOTE 8

The income tax breaks down as follows:

31.12.2018

31.12.2017 31.12.2016

€ millions

Tax on profit before tax and exceptional items Tax on exceptional items and employee Profit Sharing

4.3 2.6 6.9

156.6

105.5

9.4

7.6

INCOME TAX

166.0

113.1

In 2018, the tax income recognised by L’Oréal reflected a €56.0 million saving resulting from tax consolidation. In 2017, the income tax gain recognised by L’Oréal includes income of €184.3 million (excluding default interest) from an additional 3% tax on dividends following the claims filed for the 2013 to 2017 financial years, net of €55.7 million in charges paid in June 2017, and savings in the amount of €58.7 million resulting from tax consolidation. It also includes €51.2 million stemming from the impact of an exceptional and additional 30% in tax on companies with sales in excess of €3 billion. In 2016, the income tax gain recognised by L’Oréal included the additional 3% tax on dividends (€52.3 million) and savings

of €173.1 million resulting from tax consolidation. It also includes income of €57 million relating to claims filed in order to recover the share of costs and expenses levied on certain dividends paid to tax-consolidated companies by companies based in the European Union. The CICE ( Crédit d’Impôt Compétitivité Emploi ) tax credit is recognised as a deduction from personnel costs in an amount of €5.8 million versus €6.4 million in 2017 and €5.1 million in 2016. It represented 6% of eligible salaries paid in 2018 ( versus 6% in 2016 and 7% in 2017). The CICE tax credit was allocated to investments in premises.

Increases or reductions in future tax liabilities

NOTE 9

31.12.2018

31.12.2016

31.12.2017

Changes Liability

€ millions

Asset

Liability

Asset

Liability

Asset

Asset

Liability

Temporary differences Regulated provisions

31.6

30.6

10.2

1.7

22.1

Temporarily non-deductible charges Charges deducted (or revenue taxed) for tax purposes but not yet recognised Temporarily non-taxable revenue Deductible items Tax losses, deferred items Potentially taxable items Special reserve for long-term capital gains

55.5

84.7

7.6

17.7

74.7

2.8

8.4

3.6

12.0

182.7

182.7

182.7

These figures factor in the social contribution of 3.3% which is

rates, and the reduction in the tax rate in 2022, mainly for

added to corporate income tax, both at normal and reduced intangible asset impairment.

Research costs

NOTE 10

Expenses booked in Research activities in 2018 totalled €923.3 million compared with €895.0 million in 2017 and €858.1 million in 2016.

REGISTRATION DOCUMENT / L'ORÉAL 2018

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