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Income Taxes
 12 Months Ended
Dec. 31, 2022
Disclosure Of Income Taxes [Abstract]  
Income Taxes

Note 15 - Income Taxes

 
  A.
Deferred tax balances:
 
Tax balances presented in the statement of financial position:
 
   
As of December 31
  
   
2022
    
2021
  
   
USD in thousands
    
USD in thousands
  
Current tax assets (liabilities):
            
Current tax assets
    
286
      
267
  
Current tax liabilities
    
(6,225
)
    
(1,482
)
Total current tax assets (liabilities)
    
(5,939
)
    
(1,215
)
                 
Non-current tax assets (liabilities):
                
Deferred tax assets
    
4,683
      
21,864
  
Deferred tax liabilities
    
(14,133
)
    
(12,411
)
Total non-current tax assets (liabilities)
    
(9,450
)
    
9,453
  
 
The composition of deferred tax assets (liabilities) is specified below:
 
   
Balance as of
January 1
2022
    
Recognized in the
statement of
income
    
Other
comprehensive
income
    
Balance as of
December 31
2022
  
   
USD in thousands
    
USD in thousands
    
USD in thousands
    
USD in thousands
  
Temporary differences:
                        
Fixed assets
    
(7,227
)
    
(8,627
)
    
1,234
      
(14,620
)

IFRS 16 – Leases

    
1,389
      
(400
)
    
(144
)
    
845
  
Financial instruments
    
6,447
      
846
      
(12,849
)
    
(5,556
)
Contractual asset in respect of concession arrangements
    
(19,725
)
    
744
      
2,258
      
(16,723
)
Deferred borrowing costs
    
(601
)
    
(311
)
    
85
      
(827
)
Contingent consideration
    
574
      
(2,193
)
    
35
      
(1,584
)

Others

    

758

      

(3,111

 )     (1,031 )     (3,384 )
Total
    
(18,385
)
    
(13,052
)
    
(10,412
)
    
(41,849
)
                                 
Unused losses and tax benefits:
                                
Tax losses
    
27,838
      
8,170
      
(3,609
)
    
32,399
  
     
27,838
      
8,170
      
(3,609
)
    
32,399
  
                                 
Total
    
9,453
      
(4,882
)
    
(14,021
)
    
(9,450
)
 
The composition of deferred tax assets (liabilities) is specified below: (Cont.)
 
   
Balance as of
January 1
2021
    
Recognized in the
statement of
income
    
Other
comprehensive
income
    
Recognized in
equity
    
Initial
consolidation
    
Balance as of
December 31
2021
  
   
USD in thousands
    
USD in thousands
    
USD in thousands
    
USD in thousands
    
USD in thousands
    
USD in thousands
  
Temporary differences:
                                    
Fixed assets
    
(4,202
)
    
(2,892
)
    
(248
)
    
-
      
115
      
(7,227
)

IFRS 16 – Leases, net

    
611
      
729
      
49
      
-
      
-
      
1,389
  
Financial instruments
    
2,912
      
(605
)
    
4,140
      
-
      
-
      
6,447
  
Contractual asset in respect of
                                                
 concession arrangements
    
(20,039
)
    
954
      
(640
)
    
-
      
-
      
(19,725
)
Deferred borrowing costs
    
(2,060
)
    
1,472
      
(13
)
    
-
      
-
      
(601
)
Contingent consideration
    
-
      
553
      
21
      
-
      
-
      
574
  

Others

     (1,224 )    

(245

 )    

2,227

       -       -      

758

  
Total
    
(24,002
)
    
(34
)
    
5,536
      
-
      
115
      
(18,385
)
                                                 
Unused losses and tax benefits:
                                                
Tax losses
    
29,305
      
(2,366
)
    
899
      
-
      
-
      
27,838
  
Tax benefit in respect of issuance costs
    
-
      
(872
)
    
-
      
872
      
-
      
-
  
     
29,305
      
(3,238
)
    
899
      
872
      
-
      
27,838
  
                                                 
Total
    
5,303
      
(3,272
)
    
6,435
      
872
      
115
      
9,453
  
 
Deferred tax assets and liabilities are presented offset when the Company has a legally enforceable right to offset current tax assets against current tax liabilities, and when they pertain to income taxes levied by the same tax authority, and the Company intends to settle the current tax assets and liabilities on a net basis.
 
  B.
Amounts for which deferred tax assets were not recognized:
 
The calculation of deferred taxes does not include taking into account the taxes which would have applied in case of realization of investments in investee companies, since the Group intends to hold and develop them. Additionally, deferred taxes are not taken into account in respect of profit distributions from Israeli companies, due to the fact that dividends from Israeli companies are not taxable, The total cumulative distributable profit and/or the realization of the investment in those companies amounted to approximately USD 19 million as of December 31, 2022.
 
  C.
Total expenses (income) from income taxes which were recognized in the statement of income:
 
   
For the year ended December 31
  
   
2022
    
2021
     2020  
   
USD in thousands
    
USD in thousands
    
USD in thousands
  
Current taxes:
                  
Current tax expenses
    
8,061
      
2,422
      
1,163
  
Prior year taxes
    
-
      
-
      
1,971
  
Total current taxes
    
8,061
      
2,422
      
3,134
  
                         
Deferred taxes:
                        
Deferred tax expenses (income) in respect of the
                        
creation and reversal of temporary differences
    
13,052
      
34
      
(2,105
)
Income (expenses) from the creation of deferred
                        
taxes in respect of losses and unused tax benefits
    
(8,170
)
    
3,238
      
(8,869
)
Prior year taxes
    
-
      
-
      
(4,513
)
Total deferred taxes
    
4,882
      
3,272
      
(15,487
)
                         
Total expenses (income) from income taxes
    
12,943
      
5,694
      
(12,353
)
 
  D.
Reconciliation between the theoretical tax on the pre-tax profit and the tax expense
 
Presented below is an adjustment between the tax amount which would have applied had all of the income and expenses, profit and loss in the statement of income been taxable according to the statutory tax rate, and the amount of income tax which was carried to the statement of income:
 
   
For the year ended
December 31
  
   
2022
    
2021
    
2020
  
   
USD in thousands
    
USD in thousands
    
USD in thousands
  
Profit (loss) before income taxes from continuing operations
    
51,056
      
27,369
      
(53,388
)
Primary tax rate of the Company
    
23
%
    
23
%
    
23
%
Tax calculated according to the Company’s primary tax rate
    
11,743
      
6,295
      
(12,279
)
                         
Additional tax (tax saving) in respect of:
                        
No controlling share in the profits / losses of investee partnerships
    
(896
)
    
(531
)
    
846
  
Different tax rate of foreign subsidiaries
    
(1,644
)
    
(2,370
)
    
(839
)
Non-deductible expenses
    
3,150
      
1,853
      
2,358
  
Exempt income
    
(1,170
)
    
(354
)
    
(7
)
Losses and benefits for tax purposes for which tax assets were
                        
 not created in the past, for which deferred taxes were
                        
 recognized during the reporting period
    
-
      
-
      
(38
)
Utilization of tax losses and benefits from prior years
    
310
      
179
      
128
  
Adjustments due to changes in tax rates
    
-
      
-
      
(5
)

Temporary difference in respect of subsidiaries for which

                        

 deferred taxes were not recognized

    
1,270
      
631
      
(257
)
Change in taxes in respect of previous years
    
143
      
(77
)
    
(2,541
)
Others
    
37
      
68
      
281
  
Total income taxes from continuing operations as
                        
 presented in profit or loss
    
12,943
      
5,694
      
(12,353
)
 
  E.
Carryforward losses
 
The Company’s balance of carryforward losses as of December 31, 2022 was approximately USD 153 million; Deferred taxes were not created in respect of a loss in the amount of USD 3 million.
 
  F.
Details regarding the Group’s tax environment
 
  (1)
Presented below are the tax rates which were relevant to the Group’s activity in Israel during the years 2021-2022:
2021 - 23%
2022 - 23%
 
  (2)
Taxation of subsidiaries outside of Israel:
 
Subsidiaries which are incorporated outside of Israel are assessed according to the tax laws in the countries where they are domiciled. The main tax rates which applied to the main subsidiaries incorporated outside of Israel are:
 
  •
Entities incorporated in Croatia: The corporate tax rate which applies to the Company’s activity in Croatia is 18%.
  •
Entities incorporated in Serbia: The corporate tax rate which applies to the Company’s activity in Serbia is 15%.
  •
Entities incorporated in Hungary: The corporate tax rate which applies to the Company’s activity in Hungary is 9%.
  •
Entities incorporated in Sweden: The corporate tax rate which applies to the Company’s activity in Sweden is 20.6%.
  •
Entities incorporated in Kosovo: The corporate tax rate which applies to the Company’s activity in Kosovo is 10%.
  •
Entities incorporated in Spain: The corporate tax rate which applies to the Company’s activity in Spain is 25%.
  •
Entities incorporated in the United States: The federal tax rate is 21%, and the state tax rate depends on the project’s location.
 
  (3)
Measurement of results for income tax purposes:
 
IFRS’s differ from generally accepted accounting principles in Israel, and accordingly, the preparation of financial statements in accordance with IFRS’s may reflect a financial position, operating results and cash flows which differ significantly from those which are presented according to generally accepted accounting principles in Israel, and taxation principles in Israel.
 
  A.
In the calculation of the tax provision and current tax expenses of the projects Mivtachim and Talmei Bilu, the Company does not apply Accounting Standard 33 - Service Concession Arrangements, but rather Accounting Standard 27 - Fixed Assets, and claims depreciation expenses in respect of the facilities, in accordance with the Income Tax Regulations (Depreciation), 1941.
 
  B.
The Company deducts financing, general and administrative expenses in respect of the acquisition of projects for the production of electricity, which are incorporated in the subsidiaries, in their entirety.
 
  C.
notwithstanding that stated in Note 2O(9), regarding the non-recognition of interest expenses in the statement of income in respect of capital notes which were given to consolidated companies, the Group recognizes interest expenses, in accordance with the terms of the deed, in the calculation of the investees’ taxable income for income tax purposes.
 
  (4)
The Company has final tax assessments up to and including the tax year 2018. On March 22, 2021, the Company signed an assessment agreement for the years 2014-2018 vis-à-vis the tax authorities, the main terms of which are described below:
 
  •
The Halutziot and medium rooftop projects will be taxed based on Accounting Standard 33 - “Service Concession Arrangements”.
  •
The amortization of excess cost which was created when purchasing of shares of Mivtachim and Talmei Bilu through Tlamim partnership will not be deductible.
  •
Tax payment in the amount of approximately NIS 6.5 million in respect of previous years.
  •
In 2020, the Company recognized tax income in the amount of approximately NIS 9 million, due to the release of a tax reserve which was created in respect of the gains of a financial asset from 2013, and which, in light of the assessment arrangement, is not expected to be reversed.