v3.22.4

Income Tax | 12 Months Ended
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Dec. 31, 2022
Income Tax [Abstract] |
Income Tax | Note 18.- Income Tax All the companies of Atlantica file income taxes according to the tax regulations in force in each country on an individual basis or under consolidation tax regulations. The consolidated income tax has been calculated as an aggregation of income tax expenses/income of each individual company. In order to calculate the taxable income of the consolidated entities individually, the accounting result is adjusted for temporary and permanent differences, recording the corresponding deferred tax assets and liabilities. At each consolidated income statement date, a current tax asset or liability is recorded, representing income taxes currently refundable or payable. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial statement and income tax purposes, as determined under enacted tax laws and rates. Income tax payable is the result of applying the applicable tax rate in force to each tax-paying entity, in accordance with the tax laws in force in the country in which the entity is registered. Additionally, tax deductions and credits are available to certain entities, primarily relating to inter-company trades and tax treaties between various countries to prevent double taxation. The Company offsets deferred tax assets and deferred tax liabilities in each entity where the latter has a legally enforceable right to set off current tax assets against current tax liabilities, and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority. As of December 31, 2022, and 2021, the analysis of deferred tax assets and deferred tax liabilities is as follows:
Deferred tax assets |  | Balance as of December 31, |
From |  | 2022 |  |  | 2021 |
Net operating loss carryforwards (“NOL´s”) |  |  | 442,415 |  |  |  | 323,115 |
Temporary tax non-deductible expenses |  |  | 134,328 |  |  |  | 128,186 |
Derivatives financial instruments |  |  | 3,461 |  |  |  | 55,217 |
Other |  |  | 5,895 |  |  |  | 4,225 |
Total deferred tax assets |  |  | 586,099 |  |  |  | 510,743 |
Deferred tax liabilities |  | Balance as of December 31, |
From |  | 2022 |  |  | 2021 |
Accelerated tax amortization |  |  | 524,363 |  |  |  | 465,219 |
Other difference between tax and book value of assets |  |  | 186,536 |  |  |  | 180,218 |
Derivatives financial instruments |  |  | 19,034 |  |  |  | - |
Other |  |  | 2,991 |  |  |  | 1,897 |
Total deferred tax liabilities |  |  | 732,924 |  |  |  | 647,334 |
After offsetting deferred tax assets and deferred tax liabilities, where applicable, the resulting net amounts presented on the consolidated balance sheet are as follows:
Consolidated balance sheets classifications |  | Balance as of December 31, |
|  | 2022 |  |  | 2021 |
Deferred tax assets |  |  | 149,656 |  |  |  | 172,268 |
Deferred tax liabilities |  |  | 296,481 |  |  |  | 308,859 |
Net deferred tax liabilities |  |  | 146,825 |  |  |  | 136,591 |
Most of the NOL´s recognized as deferred tax assets corresponds to the entities in the U.S., South Africa, Peru, Chile and Spain as of December 31, 2022 and 2021. As of December 31, 2022, deferred tax assets for non-deductible expenses are primarily due to the temporary limitation of financial expenses deductibles for tax purposes in the solar plants in Spain for $94 million ($97 million as of December 31, 2021). As of December 31, 2022, deferred tax liabilities for accelerated tax amortization are primarily in the U.S. assets for $274 million, the solar plants in Spain for $173 million and Kaxu for $63 million ($184 million, $186 million and $76 million as of December 31, 2021, respectively). Deferred tax liabilities for other temporary differences between the tax and book value of contracted concessional assets relate primarily to ACT for $56 million, the U.S. entities for $51 million, the Peruvian entities for $37 million and the Chilean entities for $27 million as of December 31, 2022 ($72 million, $28 million, $34 million and $27 million as of December 31, 2021, respectively). In relation to tax losses carryforwards and deductions pending to be used recorded as deferred tax assets, the entities evaluate their recoverability projecting forecasted taxable result for the upcoming years and taking into account their tax planning strategy. Deferred tax liabilities reversals are also considered in these projections, as well as any limitation established by tax regulations in force in each tax jurisdiction. Therefore, the carrying amount of deferred tax assets is reviewed at each annual closing date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each annual closing date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. In assessing the recoverability of deferred tax assets, Atlantica relies on projections of results over the useful life of the contracted concessional assets. In addition, the Company has $361 million unrecognized net operating loss carryforwards as of December 31, 2022 ($346 million as of December 31, 2021), as it considers it is not probable that future taxable profits will be available against which these unused tax losses can be utilized. The movements in deferred tax assets and liabilities during the years ended December 31, 2022 and 2021 were as follows:
Deferred tax assets |  | Amount |
As of December 31, 2020 |  |  | 152,290 |
Increase/(decrease) through the consolidated income statement |  |  | 46,855 |
Increase/(decrease) through other consolidated comprehensive income (equity) |  |  | (23,712 | )
Business combinations (Note 5) |  |  | 4,410 |
Currency translation differences and other |  |  | (7,575 | )
As of December 31, 2021 |  |  | 172,268 |
Increase/(decrease) through the consolidated income statement |  |  | 29,197 |
Increase/(decrease) through other consolidated comprehensive income (equity) |  |  | (46,344 | )
Currency translation differences and other |  |  | (5,465 | )
As of December 31, 2022 |  |  | 149,656 |
Deferred tax liabilities |  | Amount |
As of December 31, 2020 |  |  | 260,923 |
Increase/(decrease) through the consolidated income statement |  |  | 32,059 |
Business combinations (Note 5) |  |  | 4,910 |
Currency translation differences and other |  |  | 10,967 |
As of December 31, 2021 |  |  | 308,859 |
Increase/(decrease) through the consolidated income statement |  |  | (19,864 | )
Increase/(decrease) through other consolidated comprehensive income (equity) |  |  | 17,608 |
Currency translation differences and other |  |  | (10,122 | )
As of December 31, 2022 |  |  | 296,481 |
Details of income tax for the years ended December 31, 2022, 2021 and 2020 are as follows:
|  | For the year ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Current tax |  |  | (39,372 | ) |  |  | (51,016 | ) |  |  | (21,205 | )
Deferred tax |  |  | 49,061 |  |  |  | 14,796 |  |  |  | (3,672 | )
- relating to the origination and reversal of temporary differences |  |  | 49,061 |  |  |  | 14,796 |  |  |  | (3,672 | )
Total income tax (expense)/income |  |  | 9,689 |  |  |  | (36,220 | ) |  |  | (24,877 | )
The reconciliation between the theoretical income tax resulting from applying an average statutory tax rate to profit before income tax and the actual income tax expense recognized in the consolidated income statements for the years ended December 31, 2022, 2021, and 2020, is as follows:
|  | For the year ended December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Consolidated profit/(loss) before taxes |  |  | (11,776 | ) |  |  | 25,302 |  |  |  | 41,751 |
Average statutory tax rate |  |  | 25 | % |  |  | 25 | % |  |  | 25 | %
Corporate income tax at average statutory tax rate |  |  | 2,944 |  |  |  | (6,326 | ) |  |  | (10,438 | )
Income tax of associates, net |  |  | 5,366 |  |  |  | 3,076 |  |  |  | 128 |
Differences in statutory tax rates |  |  | (4,296 | ) |  |  | (3,359 | ) |  |  | (94 | )
Unrecognized NOLs and deferred tax assets |  |  | (10,944 | ) |  |  | (11,232 | ) |  |  | (37,183 | )
Purchase of Liberty Interactive’s equity interest in Solana |  |  | - |  |  |  | - |  |  |  | 36,352 |
Other permanent differences |  |  | 3,957 |  |  |  | (4,052 | ) |  |  | (8,895 | )
Other non-taxable income/(expense) |  |  | 12,662 |  |  |  | (14,327 | ) |  |  | (4,747 | )
Corporate income tax |  |  | 9,689 |  |  |  | (36,220 | ) |  |  | (24,877 | )
For the year ended December 31, 2021, the overall effective tax rate was different than the average statutory rate of 25% primarily due to unrecognized tax losses carryforwards, mainly in the UK entities and to provisions recorded for potential tax contingencies in some jurisdictions. For the year ended December 31, 2020, the overall effective tax rate was different than the average statutory rate of 25% primarily due to unrecognized tax losses carryforwards, mainly in the UK entities, partially offset by the non-taxable gain recorded in the Consolidated Financial Statements on the purchase of Liberty Interactive’s equity interest in Solana (Note 21). Uncertain tax positions as of December 31, 2022, 2021 and 2020 has been analysed by the Company in accordance with IFRIC 23 (uncertainty over income tax treatments). As a result of this analysis, the Company concluded that the risk of the uncertainties is remote and accordingly, the expectation is that these uncertainties would have an insignificant effect on the Consolidated Financial Statements.

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