8.2 Effective tax rate
A reconciliation of the calculation of income tax on profit before tax at the statutory tax rate and income tax calculated according to the effective tax rate of the Group is as follows:
| (in PLNm) | Year ended December 31, 2022 |
Year ended December 31, 2021 |
| PROFIT/(LOSS) BEFORE TAX | 4.110 | 4.871 |
| Income tax according to Polish statutory tax rate of 19% | 781 | 926 |
| ITEMS ADJUSTING INCOME TAX | ||
| Adjustments concerning current income tax from prior years | 7 | 27 |
| Adjustments of deferred income tax | (12) | (1) |
| Result on settlement of loss of control | – | (62) |
| Costs not recognised as tax-deductible costs | 60 | 50 |
| Tax loss | 25 | 9 |
| Recognition of non-tax provisions and impairment losses | 151 | 51 |
| Reversal of non-tax provisions and impairment losses | (183) | (53) |
| Non-taxable income | (126) | 5 |
| Other adjustments | 17 | (26) |
| TAX AT EFFECTIVE TAX RATE Income tax (expense) as presented in the consolidated financial statements |
720 | 926 |
| EFFECTIVE TAX RATE | 18% | 19% |
As described in note 7.3, in the present period subsidiary PGE GiEK S.A. imposed a PLN 562 million contractual penalty. The contractual penalty is covered by an impairment loss of the same amount. No deferred tax was recognised on the revenue or on the created impairment loss (PLN 107 million).
In the comparative period, the adjustments relating to the settlement of current income tax of previous years relate to the final tax settlement of the group for the previous year. The differences arise from sales of electricity for the previous year invoiced in the current year, previously recognised based on estimates.
In the comparative period, the result on loss of control is related to Ørsted’s acquisition of 50% of the increased share capital in EWB2 and EWB3 as further described in note 1.3.2.