16. Income tax

Income tax expense comprises current and deferred tax. The income tax expense is recognized in the income statement excluding the situations when it is recognized directly in equity. The current tax is the tax payable of the Group entities on their taxable income for the period, calculated based on binding tax rates, and any adjustment to tax payable in respect of previous years. The receivables resulting from taxes are disclosed if the Group’s companies has sufficient certainty that they exist and that they will be recovered.

Deferred tax assets and deferred tax liabilities are calculated, using the balance sheet method, on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax is determined using tax rates based on legislation enacted or substantively enacted at the balance sheet date and expected to apply when the deferred tax asset or the deferred tax liability is realized.

A deferred tax asset is recognized for negative temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized.

A deferred tax liability is calculated using the balance sheet method based on identification of positive temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes.

The below additional information notes present the Group gross profit’s.

Reconciliation between tax calculated by applying the current tax rate to accounting profit and the actual tax charge presented in the separate income statement.

The applied tax rate of 19% is the corporate income tax rate binding in Poland.

In the opinion of the Group the deferred tax asset in the amount of PLN 1 119 million reported as at 31 December 2023 is sustainable in total amount. The analysis was performed based on the past results of the company and assumed results in the future periods. The analysis assumed the five years’ time horizon.

As at 31 December 2023 and 31 December 2022, there were no temporary differences related to investments in subsidiaries and associates, for which deferred tax liability was not created as a result of meeting the conditions of controlling the terms of temporary differences’ reversing and being probable that these differences will not reversein foreseeable future.

The amount of unrecognized tax losses in relation to which deferred tax asset was not recognized in the statement of financial position as well as the expiration date of the possibility of using an unrecognized tax loss.