Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

The Consolidated Statements of Income line item “Provision for income taxes” can be broken down as follows:



	Year Ended December 31,
	2014			2015			2016
	(in thousands)
Current income tax	$	(22,893	)	$	(25,265	)	$	(43,153	)
France	(11,087		)	(15,458		)	(20,204		)
International	(11,806		)	(9,807		)	(22,949		)
Net change in deferred taxes	5,315			15,748			10,024
France	671			2,009			2,654
International	4,644			13,739			7,370
Provision for income tax	$	(17,578	)	$	(9,517	)	$	(33,129	)

Schedule of Effective Income Tax Rate Reconciliation

The following table shows the reconciliation between the effective and nominal tax expense at the nominal standard French rate of 34.43% (excluding additional contributions):



	Year Ended December 31,
	2014			2015			2016

	(in thousands)

Income before taxes	$	64,474		$	71,793		$	120,458
Theoretical group tax-rates	34.43		%	34.43		%	34.43		%
Nominal tax expense	(22,198		)	(24,718		)	(41,474		)

Increase / decrease in tax expense arising from:
Research tax credit	1,743			1,352			1,701
Net effect of shared based compensation ⁽¹⁾	3,419			2,048			(8,957		)
Other permanent differences	(2,245		)	(804		)	(3,518		)
Non recognition of deferred tax assets related to tax losses and temporary differences ⁽²⁾	(3,546		)	(7,662		)	(7,738		)
Utilization or recognition of previously unrecognized tax losses ⁽³⁾	276			12,264			13,366
French CVAE included in income taxes	(2,467		)	(3,052		)	(3,165		)
Special tax deductions ⁽⁴⁾	8,984			12,545			20,022
Effect of different tax rates	(1,019		)	(1,046		)	(1,108		)
Other differences	(525		)	(444		)	(2,258		)
Effective tax expense	$	(17,578	)	$	(9,517	)	$	(33,129	)

Effective tax rate	27.3		%	13.3		%	27.5		%

Increases and decreases in tax expense are presented applying the theoretical Group tax rate to the concerned tax bases. The impact resulting from the differences between local tax rates and the Group theoretical rate is shown in the “effect of different tax rates.”

⁽¹⁾

While in most countries share-based compensation does not give rise to any tax effect either when granted or when exercised, the United States and the United Kingdom generally permit tax deductions in respect of share-based compensation. The tax deduction generated in the United States and United Kingdom is in connection with the significant number of options exercised during the period was offset by the share-based compensation accounting expense exclusion.


⁽²⁾	Deferred tax assets on which a valuation allowance has been recognized mainly relate to Criteo Ltd, Criteo do Brasil, Criteo Singapore Pte. Ltd and Criteo Advertising (Beijing) Co. Ltd tax losses.


⁽³⁾	The 2014 balance relates exclusively to Criteo Pty. The 2015 and 2016 balances mainly relate to the recognition of Criteo Corp. tax losses considering the projected taxable income within the next 3 years and the Section IRC 382 annual limitation.


⁽⁴⁾	Special tax deductions refer to the application of a reduced income tax rate on the majority of the technology royalties income invoiced by the Parent to its subsidiaries.

Schedule of Deferred Tax Assets and Liabilities

The following table shows the changes in the major sources of deferred tax assets and liabilities:



(in thousands)	Year ended December 31, 2014			Change recognized in profit or loss			Change recognized in OCI			Change in consolidation scope			Other		Currency translation adjustments			Year ended December 31, 2015

Deferred tax assets:
Net operating loss carryforwards	$	23,468		$	(385	)	$	—		$	5,889		$	—	$	(549	)	$	28,423
Personnel-related accruals	2,538			5,414			—			9			—		(659		)	7,302
Other accruals	2,285			1,353			—			—			—		(545		)	3,093
Projected benefit obligation	472			202			(44		)	—			—		(52		)	578
Other	1,458			4,372			—			1,091			—		(79		)	6,842
Deferred tax assets (gross)	30,221			10,956			(44		)	6,989			—		(1,884		)	46,238
Valuation allowance	(19,863		)	1,429			21			(7,177		)	—		1,610			(23,980		)
Deferred tax asset (net)	10,358			12,385			(23		)	(188		)	—		(274		)	22,258
Deferred tax liabilities:
Intangible assets	(2,861		)	5,445			—			(2,979		)	—		245			(150		)
Other	(4		)	(2,082		)	—			47			—		(12		)	(2,051		)
Deferred tax liabilities	(2,865		)	3,363			—			(2,932		)	—		233			(2,201		)
Net deferred income tax balance	$	7,493		$	15,748		$	(23	)	$	(3,120	)	$	—	$	(41	)	$	20,057



(in thousands)	Year ended December 31, 2015			Change recognized in profit or loss			Change recognized in OCI			Change in consolidation scope		Other			Currency translation adjustments			Year ended December 31, 2016

Deferred tax assets:
Net operating loss carryforwards	$	28,423		$	(1,048	)	$	—		$	—	$	—		$	(912	)	$	26,463
Personnel-related accruals	7,302			257						—		(30		)	241			7,770
Other accruals	3,093			975						—		30			276			4,374
Projected benefit obligation	578			213			466			—		—			(50		)	1,207
Other	6,842			7,331			—			—		(482		)	(265		)	13,426
Deferred tax assets (gross)	46,238			7,728			466			—		(482		)	(710		)	53,240
Valuation allowance	(23,980		)	3,630			(16		)	—		—			545			(19,821		)
Deferred tax asset (net)	22,258			11,358			450			—		(482		)	(165		)	33,419
Deferred tax liabilities:
Intangible assets	(150		)	(6		)	(477		)	—		(33		)	35			(631		)
Other	(2,051		)	(1,328		)	—			—		515			20			(2,844		)
Total deferred tax liabilities	(2,201		)	(1,334		)	(477		)	—		482			55			(3,475		)
Net deferred income tax balance	$	20,057		$	10,024		$	(27	)	$	—	$	—		$	(110	)	$	29,944