G11 Income tax

Recognized in profit and loss

Income tax expense for the year	2021	2022
Current tax	–4,068	–5,394
Adjustment of taxes attributable to prior years	482	135
Total current tax expense	–3,586	–5,259
Deferred taxes relating to temporary differences and tax losses carried forward	–145	375
Total tax expense	–3,731	–4,884

The Group’s recognized tax expense for the continuing operations for the year amounted to SEK 4,884 million (3,731) or 27.5 percent (22.2) of profit before tax.

Reconciliation of the tax expense

The Group’s weighted average tax rate for the continuing operations, calculated in accordance with the statutory tax rate in each country, is 22.8 percent (23.7). The tax rate in Sweden is 20.6 percent (20.6).

Reconciliation of the Group’s weighted average tax rate, based on the tax rate in each country, and the Group’s actual tax expense:

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	2021		2022
Continuing operations	MSEK	%	MSEK	%
Profit before tax	16,818		17,738
Weighted average tax based on each country’s tax rate	–3,989	–23.7	–4,052	–22.8

Tax effect of
Non-deductible expenses	–93	–0.6	–335	–1.9
Tax-exempt income	117	0.7	173	1.0
Adjustments relating to prior years	482	2.9	135	0.8
Effects of tax losses carried forward, net	–157	–1.0	–372	–2.1
Other	–91	–0.5	–433	–2.5
Total recognized tax expense	–3,731	–22.2	–4,884	–27.5

Tax items attributable to other comprehensive income

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	2021			2022
	Before tax	Tax	After tax	Before tax	Tax	After tax
Actuarial gains/losses attributable to defined-benefit pension plans	2,492	–501	1,991	3,405	–786	2,620
Translation differences for the year	3,846	–	3,846	7,616	–	7,616
Fair-value changes in Cash-flow hedges for the year	48	–11	37	–98	34	–64
Other comprehensive income	6,385	–512	5,873	10,923	–752	10,172

Recognized in the balance sheet

Deferred tax assets and liabilities

The deferred tax assets and liabilities recognized in the balance sheet are attributable to the following assets and liabilities.

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2021

2022

Deferred tax assets

Deferred tax liabilities

Net

Deferred tax assets

Deferred tax liabilities

Net

Intangible assets

–2,263

–2,214

151

–3,693

–3,542

Property, plant and equipment

251

–1,534

–1,283

283

–1,115

–832

Financial non-current assets

104

–309

–205

–502

–419

Inventories

1,163

–94

1,069

1,525

–151

1,374

Receivables

177

–197

–20

–116

–37

Interest-bearing liabilities¹⁾

1,717

–101

1,616

859

–64

795

Non Interest-bearing liabilities²⁾

1,312

–31

1,281

1,678

–27

1,651

Other

–

Tax losses carried forward

222

–

222

373

–

373

Total

4,999

–4,529

470

5,036

–5,668

–632

Offsetting within companies

–1,541

1,541

–

–1,663

1,663

–

Total deferred tax assets and liabilities

3,458

–2,988

470

3,373

–4,005

–632

1)	Mainly related to pensions
2)	Mainly related to provisions

Unrecognized deferred tax assets

The Group has additional tax losses carried forward of SEK 4,890 million (3,526). The main part of the change for 2022 relates to tax losses in Russia. No deferred tax asset was recognized for these losses.

The expiry dates of these tax losses carried forward are distributed as follows:

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Year	MSEK
2023	63
2024	31
2025	30
2026	506
2027	30
No expiry date	4,230
Total	4,890

Related deferred tax assets were not recognized since utilization of the tax losses carried forward against future taxable profits is not deemed probable in the foreseeable future. The tax value of the unrecognized tax losses amounts to SEK 1,191 million (968).

Change of deferred tax in temporary differences and unutilized tax losses carried forward

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	2021	2022
Balance at the beginning of the year, net	2,039	470
Recognized in profit and loss	–145	375
Acquisitions/disposals of subsidiaries	–863	–668
Recognized in other comprehensive income	–512	–752
Translation differences	–9	–57
Discontinued operations	–40	–
Balance at end of year, net	470	–632

In addition to the deferred tax assets and liabilities, Sandvik reports the following tax liabilities and receivables:

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	2021	2022
Income tax liabilities	–2,820	–2,904
Income tax receivables	1,158	972
Tax liabilities/receivables, net	–1,662	–1,932

Accounting principles

Income tax comprises current and deferred tax. Income tax is recognized in profit or loss for the year except when the underlying transaction is recognized in other comprehensive income. In these cases, the associated tax effects are recognized in other comprehensive income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date, and any adjustment to tax payable in respect to previous years.

Current tax liabilities are offset against current tax receivables and deferred tax assets are offset against deferred tax liabilities when the entity has a legal right to offset these items and intends to do so.

Deferred tax is recognized based on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their value for tax purposes. Deferred taxes are measured at their nominal amount and based on the expected manner of realization or settlement of the carrying amount of the underlying assets and liabilities, using tax rates and fiscal regulations enacted or substantively enacted at the balance sheet date.

Deferred tax assets relating to deductible temporary differences and tax losses carried forward are recognized only to the extent that it is probable they can be utilized against future taxable profits.

Critical estimates and key judgments

Significant estimates are made to determine both current and deferred tax liabilities/assets, not least the value of deferred tax assets.

The actual results may differ from these estimates, for instance due to changes in the business climate, changed tax legislation, or the outcome of the final review by tax authorities and tax courts of tax returns.

The recognized provision for ongoing tax litigations and other uncertainties amounted to SEK 811 million (893) and is based on management’s best estimate of the outcome.