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Commission Regulation (EU) 2018/1595 of 23 October 2018 amending Regulation (EC) No 1126/2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council as regards Interpretation 23 of the International Financial Reporting Interpretations Committee (Text with EEA relevance)
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THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards(1), and in particular Article 3(1) thereof,
Whereas:
(1) By Commission Regulation (EC) No 1126/2008(2) certain international standards and interpretations that were in existence at 15 October 2008 were adopted.
(2) On 7 June 2017, the International Accounting Standards Board (IASB) published Interpretation 23 Uncertainty over Income Tax Treatments of the International Financial Reporting Interpretations Committee (IFRIC 23). IFRIC 23 specifies how to reflect uncertainty in accounting for income taxes.
(3) Adoption of IFRIC 23 implies by way of consequence, amendments to International Financial Reporting Standard (IFRS) 1, in order to ensure consistency between international accounting standards.
(4) The consultation with the European Financial Reporting Advisory Group confirms that IFRIC 23 meets the criteria for adoption set out in Article 3(2) of Regulation (EC) No 1606/2002.
(5) Regulation (EC) No 1126/2008 should therefore be amended accordingly.
(6) The measures provided for in this Regulation are in accordance with the opinion of the Accounting Regulatory Committee,
HAS ADOPTED THIS REGULATION:
The Annex to Regulation (EC) No 1126/2008 is amended as follows:
Interpretation 23 Uncertainty over Income Tax Treatments of the International Financial Reporting Interpretations Committee (IFRIC 23) is inserted as set out in the Annex to this Regulation;
International Financial Reporting Standard (IFRS) 1 is amended in accordance with IFRIC 23 as set out in the Annex to this Regulation.
Each company shall apply the amendments referred to in Article 1, at the latest, as from the commencement date of its first financial year starting on or after 1 January 2019.
This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.
This Regulation shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels, 23 October 2018.
For the Commission
The President
Jean-Claude Juncker
IAS 1 Presentation of Financial Statements
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
IAS 10 Events after the Reporting Period
IAS 12 Income Taxes
‘tax treatments’ refers to the treatments used by an entity or that it plans to use in its income tax filings.
‘taxation authority’ refers to the body or bodies that decide whether tax treatments are acceptable under tax law. This might include a court.
an ‘uncertain tax treatment’ is a tax treatment for which there is uncertainty over whether the relevant taxation authority will accept the tax treatment under tax law. For example, an entity's decision not to submit any income tax filing in a tax jurisdiction, or not to include particular income in taxable profit, is an uncertain tax treatment if its acceptability is uncertain under tax law.
whether an entity considers uncertain tax treatments separately;
the assumptions an entity makes about the examination of tax treatments by taxation authorities;
how an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates; and
how an entity considers changes in facts and circumstances.
the most likely amount—the single most likely amount in a range of possible outcomes. The most likely amount may better predict the resolution of the uncertainty if the possible outcomes are binary or are concentrated on one value.
the expected value—the sum of the probability-weighted amounts in a range of possible outcomes. The expected value may better predict the resolution of the uncertainty if there is a range of possible outcomes that are neither binary nor concentrated on one value.
This appendix is an integral part of IFRIC 23 and has the same authority as the other parts of IFRIC 23.
examinations or actions by a taxation authority. For example:
agreement or disagreement by the taxation authority with the tax treatment or a similar tax treatment used by the entity;
information that the taxation authority has agreed or disagreed with a similar tax treatment used by another entity; and
information about the amount received or paid to settle a similar tax treatment.
changes in rules established by a taxation authority.
the expiry of a taxation authority's right to examine or re-examine a tax treatment.
judgements made in determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates applying paragraph 122 of IAS 1 Presentation of Financial Statements; and
information about the assumptions and estimates made in determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates applying paragraphs 125–129 of IAS 1.
This appendix is an integral part of IFRIC 23 and has the same authority as the other parts of IFRIC 23.
retrospectively applying IAS 8, if that is possible without the use of hindsight; or
retrospectively with the cumulative effect of initially applying the Interpretation recognised at the date of initial application. If an entity selects this transition approach, it shall not restate comparative information. Instead, the entity shall recognise the cumulative effect of initially applying the Interpretation as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate). The date of initial application is the beginning of the annual reporting period in which an entity first applies this Interpretation.
An entity shall apply the amendment in this Appendix when it applies IFRIC 23.
Paragraph 39AF is added.
In Appendix E, paragraph E8 and related heading are added.
Commission Regulation (EC) No 1126/2008 of 3 November 2008 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council (OJ L 320, 29.11.2008, p. 1).
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