Ubisoft 2016 Annual Report Download - page 148

Financial statements
5Consolidated fi nancial statements asatMarch31, 2016
Deferred tax assets
Taxes on capitalized/non-capitalized losses
(in €thousands)
03/31/16 03/31/15
Capitalized
losses Non-capitalized losses Total Capitalized losses Non-capitalized losses Total
Tax group France* 20,378 - 20,378 26,855 - 26,855
Other subsidiaries France 1,425 1,265 2,690 1,498 441 1,939
Hybride TechnologiesInc. 198 198 274 - 274
Ubisoft Studio Saint AntoineInc. - - - 1,030 - 1,030
Ubisoft GmbH - - - 366 - 366
Other 146 175 321 733 398 1,131
TOTAL 22,147 1,440 23,587 30,756 839 31,595
* Deferred tax on accelerated depreciation has been reclassifi ed under loss carryforwards
Deferred income tax assets are recognized if their recovery is likely,
particularly when taxable profi t is expected during the period of
validity of the deferred tax assets.
The forecast period used to determine the recovery time on
capitalized losses is four to seven years, a period which is considered
reasonable by management. The entire loss carryforwards of the
French tax group over the past year remains therefore capitalized
as at March 31, 2016.
Because of a transfer price policy implemented by the Group, the
distribution companies and companies fulfi lling support functions
systematically report operating profi ts. Similarly, the studios invoice
salaries with a margin that includes their overheads.
The use of tax losses is not limited in time.
Investment tax credits
03/31/16 03/31/15
Capitalized investment tax credit 54,326 56,286
TOTAL 54,326 56,286
Ubisoft Entertainment Inc. benefi ts from tax credits contingent upon
the generation of taxable income. These tax credits recoverable on
future income taxes have a life of 20 years. The future use of these
tax credits is subject to tax planning at the local level and at the
Group level. They are recognized as assets of the Group since their
recoverability horizon is reasonable.
The Group shall ensure that, at each annual accounting period, the
deferred tax assets relating to tax losses and tax credits recoverable
only by deduction from future tax, shall be recovered within a
reasonable timeframe based on its estimates of future taxable
income. The assumptions used for tax planning are consistent with
those of the business plans made by management of the Group for
the implementation of impairment testing of intangible assets with
indefi nite lives.
Deferred tax liabilities
Grants and tax credits
Ubisoft Entertainment Inc. benefi ts from multimedia credits and
investment tax credits. These credits are taxable during the year of
their receipt or use, but are recognized on a fi nancial year basis. The
Company recognizes a future tax liability for this item.
Accelerated depreciation (Article236 of the French
General Tax Code– CGI)
As permitted under the provisions of Article 236 of the French
General Tax Code, Ubisoft Entertainment SA opted to immediately
expense software development costs where design started during the
period. At March 31, 2016, the provision for commercial software
was €147.2 million and a €7.3 million reversal was recognized for
external software. In accordance with IAS 12, the cancellation of
the accelerated tax depreciation generates a deferred tax liability,
which is then classifi ed under loss carryforwards.
- Registration Document 2016
146