METSÄ BOARD Annual review 2023
6. Income taxes
Cash flow hedge maturities 2023
1–6 months
7–12 months
1–5 years
over 5 years
Hedged cash flow total
EUR million
Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6
EUR million
2023
2022
Income taxes for the financial period Income taxes from previous periods
-12.8
-36.4
Interest rate derivatives, hedge accounting Currency rate derivatives, hedge accounting Currency derivatives, no hedge accounting Commodity derivatives, hedge accounting
50.0
50.0 813.8
Accounting principles Tax expenses in the income statement consist of taxes based on the taxable income for the period, taxes for previous periods, and deferred tax assets and liabilities. The tax effect related to the items recorded in the comprehensive income statement is recognised in the comprehensive income statement. Taxes based on the taxable income for the period are calculated based on taxable income in accordance with the tax rate as it stands in each country at that time. Deferred tax assets and liabilities are calculated on the temporary differences between the carrying amount and the tax base in accordance with the tax rates enacted as at the balance sheet date. No deferred taxes are recognised for non-deductible goodwill, and no deferred taxes are recognised for subsidiaries’ undistrib- uted profits to the extent that the difference will not likely realise in the predictable future. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which a deductible temporary difference can be utilised. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred taxes are related to the same taxation authority. The most significant temporary differences arise from depre- ciation of property, plant and equipment; the measurement of other investments and derivatives contracts at fair value; defined benefit plans; unused tax losses; and measurement at fair value in conjunction with acquisitions of business operations. Key estimates and judgement The management’s judgement is required for determining the taxes based on the result for the period, deferred tax assets and liabilities, and the extent to which deferred tax assets are recorded. The Group is subject to income taxation in several countries, and the final amount of tax is uncertain for several business operations and calculations. The Group anticipates future tax audits and recognises liabilities based on estimates of whether further taxes will need to be paid. If the associated final tax differs from the originally recorded amounts, the difference has an effect on both the taxes based on the taxable income for the period, and on deferred tax receivables and liabilities.
-0.1 -6.4
-0.5
613.5
200.3
Deferred taxes
-26.7 -63.5
79.9 14.7
79.9 29.5
Income taxes total
-19.3
14.7
Strategy and financial targets
8
Value creation
Cash flow hedge maturities 2022
Income tax reconciliation
Financial development 10 Key figures 12
1–6 months
7–12 months
1–5 years
over 5 years
Hedged cash flow total
EUR million
EUR million
2023 120.9 -24.2
2022 524.9 -105.0
Result before tax
Report of the Board of Directors
Interest rate derivatives, hedge accounting Currency rate derivatives, hedge accounting Currency derivatives, no hedge accounting Commodity derivatives, hedge accounting
50.0
50.0
100.0
Calculated tax at Finnish statutory rate of 20.0%
20 72
• Sustainability statement • Sustainability statement assurance report
834.2 137.8
230.7
1,064.9
137.8 60.2
Effects of differences between Finnish and non-Finnish tax rates
-0.6
-2.4
30.1
30.1
Tax exempt income
0.5
4.9
74
Consolidated financial statements
Non-deductible expenses
-0.2
-0.4
Restatement of deferred taxes recognised for temporary differences and tax losses in previous years
-0.4
0.0
78 Notes to the consolidated financial statements 126 Parent company financial statements 129 Notes to the parent company financial statements 142 The Board’s proposal to the Annual General Meeting for the distribution of funds 143 Auditor’s Report 147 Shares and shareholders 151 Ten years in figures 152 Taxes 153 Production capacities 155 Calculation of key ratios and comparable performance measures Corporate governance 157 Corporate governance statement 165 • Board of Directors of Metsä Board 168 • Corporate Management Team of Metsä Board
Use of unrecognised tax losses
0.7
Share of result from associate companies and joint ventures Income taxes from previous periods
4.8
32.6
-0.1 0.2
-0.5
Other
7.2
Income taxes total
-19.3
-63.5
Effective tax rate, %
16.0
12.1
Taxes for the current period include a 7.1 million euros of tax support to be applied for in the 2022 taxation of the investments of the Swedish subsidiary. Taxes reported in other comprehensive income are specified in Note 5.1. Developed in the context of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, Pillar II concerns a global minimum tax rate on the income of international corporations. The change involves a new top-up corporate tax, the goal of which is to ensure a minimum tax rate of 15% worldwide. If in any of a group’s countries of operation, the aggregate effective tax rate, calculated in accordance with the provisions concerning minimum taxation, remains below 15%, a top-up tax will be imposed to raise the effective tax rate to 15% The change will apply to financial periods beginning after 31 December 2023. According to Metsä Board’s current estimates, the global minimum tax rate under Pillar II will have no impact or no material impact on the taxes paid by Metsä Board.
170 Remuneration report 174 Investor relations and investor information
118
119
Consolidated financial statements | METSÄ BOARD ANNUAL REVIEW 2023
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