TAP with €490 million in tax credits to bolster profits

Portuguese airline TAP has around €490 in past losses that are tax deductible, an amount that adds value to the company and will benefit the eventual shareholder when the carrier is privatised.

TAP’s financial report for the first half of 2024 lists €487.1 million for deferred taxes for the end of June, €39.7 million more than for the same period last year.

The increased amount was registered for the second half of 2023 when it jumped to €486.3 million.

This amount could be used by TAP to offset income tax that it will have to pay as a result of an improvement in its revenues.

This is what happened in 2022, when profits of €65.6 million benefited from €23.6 million in tax credits, and again in 2023, when the positive impact on the tax bill was €27.18 million, helping to raise profits to €177.26 million.

The airline states in the report and accounts that “the recovery of deferred tax assets posted on June 30, 2024, is expected in a period of between 10 and 12 years, given different sensitivity scenarios”.

In other words, the tax credits will benefit the company’s accounts, at least, for the next decade (as long as it has income tax to pay to the tax authorities) and therefore whichever company is in the shareholder structure. As an asset, it adds value to TAP in the privatisation process that may be relaunched later this year, after the delivery and discussion of the State Budget.

TAP closed the first half of the year with a profit of €400,000 euros, €22.6 million less than in the same period last year.