Danone // 2020 Universal Registration Document

4 91 DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 4.1 Consolidated financial statements and notes to the consolidated financial statements Note 9. Income tax Note 9.2. Deferred taxes Accounting principles Deferred taxes are recognized for temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, except for the cases specified in IAS 12 Income taxes . Deferred taxes are calculated using the liability method, applying the enacted income tax rates expected to be applicable when the temporary differences will be reversed. In addition, temporary differences are reflected in the consoli- dated financial statements as deferred tax assets or liabilities systematically in the case of associates and on the basis of the most likely scenario as regards the reversal of the differences, i.e. distribution of reserves or disposal of the entity concerned, in the case of fully consolidated subsidiaries. Deferred tax assets and liabilities are offset when the tax entity has a legal right to offset. Lastly, the Company and its subsidiariesmay be subject to tax audits. A provision is recognized in the consolidated financial statements whenever it is probable that a tax reassessment will be made. Carrying amount As of December 31 (in € millions) Notes 2019 2020 Breakdown by type of deferred tax Property, plant and equipment and intangible assets (1,710) (1,629) Tax loss carryforwards 9.3 306 302 Provisions for retirement obligations and other long-term benefits 257 281 Employee profit-sharing provisions 13 17 Restructuring provisions 10 4 Other 360 336 Net deferred taxes (765) (689) Deferred tax assets 790 785 Deferred tax liabilities (1,556) (1,474) Net deferred taxes (766) (689) Changes during the period (in € millions) Notes 2019 2020 As of January 1 (777) (766) Changes recognized in Other comprehensive income 70 (31) Changes recognized in profit or loss (40) 37 Changes in consolidation scope 4.2, 5.3 1 (10) Other (21) 81 As of December 31 (766) (689) Note 9.3. Tax loss carryforwards Accounting principles Deferred tax assets relating to tax loss carryforwards and temporary differences are recognized when it is more likely than not that these taxes will be recovered. At each closing, the Group reviews the unused tax losses and the amount of deferred tax assets recognized on the balance sheet. In some countries in which losses can be carried forward indefinitely, the Group takes into consideration long-term recovery horizons when justified in light of forecast taxable profits.