The breakdown for deferred tax assets and liabilities, by type, is as follows:

The main changes seen in 2023 relate Viscofan USA, Inc. recording temporary differences in assets and liabilities related to investments made and their accounting effects.

Deferred tax assets, on current assets, are mainly due to the effect on tax of the elimination of the margin in inventory acquired between Group companies, as well as provisions on inventories that are not tax-deductible in some countries. With respect to the deferred tax asset from non-current assets, this relates mainly to the activation of tax credits for tax losses (of 7,577 thousand euros). In addition, deferred tax assets arising from current and non-current tax liabilities relate mainly to provisions at different Group companies that will be used for tax purposes when applied. A large number of the provisions described in Note 18 have led to adjustments in the tax assessment basis in the different countries.

Deferred tax liabilities arising from non-current assets for the years ended 31 December 2023 and 2022, mainly relate to the application of different amortisation rates by certain Group subsidiaries (mostly in the USA) than those used for tax purposes. Also included is the tax effect of net unrealised gains on PP&E items acquired in different business combinations.

The breakdown of deferred tax assets and liabilities recognised in the balance sheet, according to the items giving rise to them, is as follows:

Assets within item "Other deferred tax" mainly include the temporary differences generated in Viscofan USA, corresponding to the deferral of the deductibility of certain expenses related to investments made.

The 2022 statements have been restated as a result of the amendment to IAS 12 "Deferred Taxes Relating to Assets and Liabilities Arising from a Single Transaction". The impact of this restatement has been an increase of +2,726 thousand euros in deferred tax assets and liabilities, with no impact on the 2022 results.

The tax assets recognised in respect of tax loss carry-forwards (pending application), amounting to 7,577 thousand euros, correspond to:

The following is a breakdown of the deferred tax assets not recorded at year-end 2023:

In addition, a tax incentive derived from investments in the country is available in the Republic of Serbia, reducing corporate income tax liability by 42% on tax returns filed from 2022 until 2031.

In Thailand, in February 2023, the Thailand Board of Investment granted the Group a corporate tax incentive for investments made in the country, reducing corporate tax rate by 60% until 2034.

During 2022 the Chinese subsidiary Viscofan Technology (Suzhou) Co. Ltd.'s rating was again deemed as "High Tech" for 3 years and, therefore, its tax rate dropped from 25% to 15%.

In the US, tax loss carry-forwards have been generated between 2008 and 2023. Those generated between 2008 and 2017 have a legal expiry of 20 years from generation, with no allocation limit. Those generated from 2018 onwards have no legal expiry or application limit until 2020 and are capped at 80% of the tax base as from the year beginning 1 January 2021.

The tax assets were generated between 2015 and 2023, have a legal expiry date of 20 years from their generation and their allocation is capped at 75% of the tax liability they are allocated to.

In relation to the temporary taxable differences of the subsidiaries, as at 31 December 2023 and 2022, the Group did not recognise any amount in this regard based on its dividend distribution policy, according to which it unlikely that the results accumulated by the subsidiaries as at 31 December 2023 will be distributed in the foreseeable future. This unrecognised deferred tax liability would total approximately 8.2 million euros at 31 December 2023 (11.1 million euros at 31 December 2022).

The breakdown of changes during the year in recognised deferred tax assets and liabilities arising from temporary differences recognised as income tax expense/(income) on the consolidated statement of recognised income and expense and as “Other income and expenses” on the consolidated comprehensive income statement is as follows:

The breakdown of deferred taxes charged directly against "Other comprehensive income" on the Consolidated Statement of Comprehensive Income is as follows:

The major components of income tax expense for the years ended 31 December 2023 and 2022, are as follows:

A reconciliation between tax expense/(income) on continued operations and the product of profit before tax multiplied by the tax rate prevailing in Spain (Navarre) on 31 December, is as follows:

In 2023, the Brazilian subsidiary took advantage of the corporate tax deduction for ICMS subsidies recognised under Brazilian law. 

Income tax payable from continued operations was calculated as follows:

This amount is broken down in the Consolidated Statement of Comprehensive Income as follows:

In accordance with current legislation, taxes cannot be considered definitive until they have been inspected by the tax authorities or the inspection period of four years has elapsed. At 31 December 2023, the Parent and subsidiaries in Spain are open to inspection for all the main taxes to which they are liable and for which the corresponding inspection periods have yet to expire. The situation of foreign companies depends on the legislation prevailing in each country.

Due to the different possible interpretations of prevailing legislation, additional liabilities could be identified in the event of inspection. Nonetheless, parent management considers that any additional liabilities that might arise would not have a significant impact on these consolidated financial statements.

Pillar Two legislation has been implemented, or substantially implemented, in a series of jurisdictions where the Group operates. The legislation will affect the Group's fiscal years beginning on or after 1 January 2024. The Group has performed an assessment to determine whether it is exposed to Pillar Two taxes.

The assessment is made on the basis of the most recent tax returns, country-by-country reports and financial statements of the entities forming the Group. Based on this assessment, Pillar Two effective tax rates in most of the jurisdictions in which the Group operates are above 15%. Pillar Two safe harbour provisions do not apply in a limited number of jurisdictions where the Group operates, however, material exposures to Pillar Two taxes are not expected in these jurisdictions.