IBERSOL | Integrated Management Report 2022

Consolidated Financial Statements 9.2. Deferred taxes Accounting policies Initial recognition and measurement Deferred taxes are recognized as a whole using the liability method and calculated on temporary differences arising from the difference between the tax base of assets and liabilities and their amounts in the consolidated financial statements. However, if deferred tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination or that, at the date of the transaction, does not affect either the accounting result or the tax result, this is not accounted for. Deferred taxes are determined by the tax (and legal) rates enacted or substantively enacted on the date of the consolidated statement of financial position and which are expected to be applicable in the period of realization of the deferred tax asset or settlement of the deferred tax liability. The nominal tax base rates of the jurisdictions in which the Group is present are: Portugal 21% Spain 25% Angola 25% The Group offsets deferred tax assets and deferred tax liabilities if, and only if: a) has a enforceable right to offset current tax assets against current tax liabilities; It is b) deferred tax assets and deferred tax liabilities relate to income taxes assessed by the same tax authority on either: i) the same taxable entity, or ii) different taxable entities that intend to either settle current tax liabilities and assets on a net basis, or realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. Deferred tax assets are only recognized when it is probable that there will be sufficient taxable income or taxable temporary differences related to the same tax authority to use those same deferred tax assets. Judgments and estimates At the end of each year the recorded and unrecorded deferred tax assets are revised and they are reduced whenever their future use ceases to be probable, or increased if, and to the extent that, it is probable that future taxable profits will be generated/ reversal of taxable temporary differences allows their recovery. 468