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H1 Taxes

12 Months Ended

Dec. 31, 2023

Major components of tax expense (income) [abstract]


		Taxes

The Company’s tax expense for 2023 was SEK –2,785 (–5,497) million or

–11.9% (22.3%) of income after financial items. The tax rate may vary between years depending on business and geographical mix.

Income taxes recognized in the income statement

2023

2022

2021

Current income taxes for the year

–4,289

–7,353

–6,110

Current income taxes related to prior years

118

253

–337

Deferred tax income/expense (+/–)

1,406

1,617

188

Share of taxes in joint ventures and associated companies

–20

–14

–11

Income tax expense

–2,785

–5,497

–6,270

A reconciliation between reported tax expense for the year and the theoretical tax expense that would arise when applying

the

statutory tax rate in Sweden, 20.6% (20.6% in 2022, 20.6% in 2021), on the consolidated income before taxes, is shown in the table below.

In 2023 the tax rate is negatively impacted by the effect on the non-tax deductible goodwill impairment related to Vonage of SEK 31.9 billion. In 2022 taxes were positively impacted by SEK 411 (969 in 2021) million as a result of utilization of previously expensed withholding tax assets in Sweden and negatively impacted by the tax effect of the provision for the Department of Justice (DOJ) settlement of SEK 450 million.

Reconciliation of Swedish income tax rate with effective tax rate

2023

2022

2021

Calculated tax expense at Swedish tax rate

20.6%

4,804

–5,070

–6,025

Effect of foreign tax rates

–884

–605

–324

Current income taxes related to prior years

118

253

–337

Remeasurement of tax loss carry-forwards

–28

–49

–175

Remeasurement of deductible temporary differences

394

220

Withholding tax expense

–217

–

Recognition of previously expensed withholding tax

–

411

969

Tax effect of non-deductible expenses

–7,311

–760

–975

Tax effect of non-taxable income

335

327

392

Tax effect of changes in tax rates

–19

–15

Income tax expense

–2,785

–5,497

–6,270

Effective tax rate

–11.9%

22.3%

21.4%

Deferred tax balances

Deferred tax assets and liabilities are derived from the balance sheet items as shown in the table below. The table includes the IAS 12 amendments on deferred tax arising from

single transaction effective January 1, 2023 and the comparables have been updated accordingly.


Tax effects of temporary differences and tax loss carry-forwards
	Deferred tax assets		Deferred tax liabilities		Net balance
2023
Intangible assets and property, plant and equipment		1,195		7,193
RoU lease assets and similar assets		–		1,272
Current assets		3,413		1,313
Post-employment benefits		5,297		477
Provisions		3,980		–
RoU lease liabilities and similar liabilities		1,337		–
Deferred tax credits		5,453		–
Other		2,095		178
Loss carry-forwards		6,158		–
Deferred tax assets/liabilities		28,928		10,433		18,495
Netting of assets/liabilities		–6,553		–6,553
Deferred tax balances, net		22,375		3,880		18,495

2022
Intangible assets and property, plant and equipment		1,098		8,136
RoU lease assets and similar assets		–		1,311
Current assets		3,605		1,055
Post-employment benefits		5,558		571
Provisions		5,215		–
RoU lease liabilities and similar liabilities		1,394		–
Deferred tax credits		2,081		–
Other		1,837		295
Loss carry-forwards		5,190		–
Deferred tax assets/liabilities		25,978		11,368		14,610
Netting of assets/liabilities		–6,584		–6,584
Deferred tax balances, net		19,394		4, 784		14,610


Changes in deferred taxes, net
	2023		2022
Opening balance, net		14,610		22,225
Recognized in net income		1,406		1,617
Recognized in other comprehensive income		–631		–2,099
Balances regarding acquired/divested businesses		–57		–3,911
Deferred tax credits increase (+) / utilization (–)		3,249		–3,586
Translation difference		–82		364
Closing balance, net		18,495		14,610

Total tax reported in other comprehensive income (OCI) amounted to SEK –494
(–2,980) million, of which actuarial gains and losses related to pensions constituted SEK –251 (–2,093) million, revaluation of borrowings SEK 137 (–212) million, cash flow hedges SEK –380 (–671) million and non-controlling interests SEK 0 (–4) million. Of the total tax effect reported in OCI, SEK –631 (–2,099) million is deferred tax and SEK 137 (–881) million is current tax.

As a result of parent company exemptions from tax on dividends from subsidiaries and on capital gains on disposal, there are no significant taxable temporary differences associated with investments in subsidiaries, branches, associates and joint ventures.

Tax loss carry-forwards

Significant tax assets regarding tax loss carry-forwards are reported to the extent that realization of the related tax benefit through future taxable profits is probable also when considering the period during which these can be utilized, as described below.

The majority of the recognized tax loss carry-forwards pertains to Sweden,

, Brazil and Mexico. These countries have long or indefinite periods of utilization. Of the total SEK 6,158 (5,190) million recognized deferred tax assets related to tax loss carry-forwards, SEK 4,172 (3,508) million relates to Sweden.

Future income projections support the conclusion that the deferred tax assets will be utilized in the foreseeable future.

As of December 31, 2023, the recognized tax loss carry-forwards amounted to SEK 27,666 (23,438) million. The tax value of the tax loss carry-forward is reported as a tax asset based on the utilization period and the expectation that the group will realize a significant taxable income to offset these loss carry-forwards.

Tax

loss carry-forwards of SEK 8,918 (8,490) million at a tax value of SEK 1,819 (1,777) million have not been recognized due to judgments that they are unlikely to be utilizable against future taxable profits in the respective jurisdictions. The majority of both recognized and unrecognized tax loss carry-forwards have an expiration date in excess of five years. The majority of unrecognized tax loss carry-forwards pertains to

US, UK

and Ireland. The final years which the recognized and unrecognized tax loss carry-forwards can be utilized are shown in the following table.


Tax loss carry-forwards
	Recognized tax loss				Unrecognized tax loss
Year of expiration	Tax loss carry-forwards		Tax value		Tax loss carry-forwards		Tax value
2024		15		3		159		20
2025		16		3		153		20
2026		124		31		151		25
2027		1,101		281		92		10
2028		1,688		373		100		13
2029 or later (also includes unlimited carry-forwards)		24,722		5,467		8,263		1,731
Total		27,666		6,158		8,918		1,819

Deferred tax credits

In addition to deferred tax credits of SEK 5,453 (2,081) million recognized in 2023, unused deferred tax credits, relating mainly to R&D tax credits, for which no deferred tax asset was recognized in the

consolidated balance sheet

amounted to SEK 1,148 (1,296) million. The final years in which the tax credits can be utilized are shown in the below table.

Risk assessment on the business plans is carried out on a regular basis, and deferred tax asset recoverability analysis will be performed if conditions suggest that such assets might need to be impaired.


Deferred tax credits
	Recognized deferred tax credits		Unrecognized deferred tax credits
Year of expiration	Tax Value		Tax Value
2024		99		135
2025		938		108
2026		46		125
2027		1,778		133
2028		1,521		8
2029 or later		1,071		639
Total		5,453		1,148

The Group has applied the temporary exception issued by the IASB in May 2023 from the accounting requirements for deferred taxes in IAS 12. Accordingly, the Group neither recognises nor discloses information about any deferred tax assets or liabilities related to Pillar Two income taxes. See also note A1 “Material accounting policies” for more information.