Financial Statements 2021

2. Notes to the IFRS Consolidated Financial Statements / 2.4 Airbus Performance

The following table shows a reconciliation from the theoretical income tax (expense) using the Dutch corporate tax rate to the reported income tax (expense):

2021

2020

(In € million)

Profit (Loss) before income taxes

5,027

(1,130)

25.0%

25.0%

Corporate income tax rate

(1,257)

283

Expected (expense) for income taxes

(103)

(4)

Effects from tax rate differentials / Change of tax rate

5

(3)

Capital gains and losses on disposals / mergers

Income from investment and associates

23

24

53

13

Tax credit

116

(356)

Change in valuation allowances (1)

186

147

Tax contingencies

124

(143)

Other non-deductible expenses and tax-free income

Reported tax (expense)

(853)

(39)

(1) Reassessments of the recoverability of deferred tax assets based on future taxable profits.

The income tax expense amounts to € -853 million (2020: € -39 million) and corresponds to an ef fective income tax rate of 17.0%. This includes positive impacts from tax risk updates, the tax-free revaluation of certain equity investments under IFRS 9 and a net release of deferred tax asset impairments mainly due to an updated business outlook. Management will continue to assess its tax contingencies going forward, whose outcome could result in further financial impacts. In 2020, the effective tax rate was mainly driven by the negative pre-tax result offset by deferred tax impairments and tax-free revaluation of certain equity investments. As the Company controls the timing of the reversal of temporary differences associated with its subsidiaries (usually referred to as “outside basis differences”) arising from yet undistributed profits and changes in foreign exchange rates, it does not recognise

a deferred tax liability. For temporary differences arising from investments in associates the Company recognises deferred tax liabilities. The rate used reflects the assumptions that these differences will be recovered from dividend distribution unless a management resolution for the divestment of the investment exists at the closing date. For joint ventures, the Company assesses its ability to control the distribution of dividends based on existing shareholder agreements and recognises deferred tax liabilities accordingly. As of 31 December 2021, the aggregate amount of temporary differences associated with investments in subsidiaries, branches and associates and interests in joint arrangements, for which deferred tax liabilities have not been recognised, amounts to €145 million.

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Airbus / Financial Statements 2021