26.2. Deferred tax

Deferred tax assets are recognised in the amounts which are expected to be utilised using future taxable profits estimated on the basis of the business plan approved by the Management Board of Orange Polska and used to determine the value in use of the telecom operator CGU (key assumptions are described in Note 9), which are considered as a positive evidence supporting the recognition of deferred tax assets.

Deferred tax assets as at 31 December 2020 include PLN 747 million of deferred tax asset in OPL S.A., of which PLN 28 million is recognised on tax losses incurred in 2016 and 2017. In years 2018 – 2020 OPL S.A. had tax profits on operating activities and utilised PLN 722 million of its tax losses from previous years, which is an additional positive evidence supporting the Company’s assessment of its ability to generate future taxable profits to utilise the recognised deferred tax assets, including deferred tax asset on tax losses from prior years before they expire in 2021 and 2022.

Significant amount of the Group’s deferred tax assets relates to property, plant and equipment and intangible assets and has been recognised on temporary differences arising mainly from different tax and accounting depreciation rates used by the Group. As a result, the estimated period required to utilise this deferred tax asset is dependent on useful lives of items of property, plant and equipment and intangible assets estimated for accounting and tax purposes. The majority of deferred tax asset relating to property, plant and equipment and intangible assets is expected to be utilised after year 2023.

Unrecognised deferred tax assets relate to temporary differences, which based on the Group’s Management assessment could not be utilised for tax purposes. As at 31 December 2020 and 2019, deductible temporary differences, for which no deferred tax asset was recognised, amounted to PLN 88 million and PLN 85 million gross, of which PLN 86 million and PLN 81 million, respectively, are related to incurred tax losses, which are expected to expire rather than to be realised.