AIRBUS - 2020 Financial Statement

2. Notes to the IFRS Consolidated Financial Statements / 2.4 Airbus Performance

The following table shows a reconciliation from the theoretical income tax (expense) using the Dutch corporate tax rate to the reported income tax (expense):

2020

2019

(In € million)

Profit before income taxes

(1,130)

1,064

25.0%

25.0%

Corporate income tax rate

283

(266)

Expected (expense) for income taxes

(4)

(439)

Effects from tax rate differentials / Change of tax rate

(3)

21

Capital gains and losses on disposals/mergers

24

74

Income from investment and associates

13

49

Tax credit

Change in valuation allowances (1)

(356)

(467)

Non-deductible final agreements reached with PNF, SFO and DoS

(899)

147

(331)

Tax contingencies

(143)

(131)

Other non-deductible expenses and tax-free income

Reported tax (expense)

(39)

(2,389)

(1) Reassessments of the recoverability of deferred tax assets based on future taxable profits.

The income tax expense amounts to € -39 million (2019: € -2,389 million). It corresponds to an effective income tax rate of -3.5% driven by the negative pre-tax result in 2020 offset by deferred tax impairments and tax-free revaluation of certain equity investments. In 2019, the high effective tax rate was mainly driven by the non- deductibility of the penalties accounted for in the 2019 accounts (see “– Note 39: Litigation and Claims”). It also comprises deferred tax impairments and tax risk updates partially offset by the sales of PFW Aerospace GmbH and Alestis Aerospace S.L. at a reduced tax rate (see “– Note 8: Acquisitions and Disposals”). As the Company controls the timing of the reversal of temporary differences associated with its subsidiaries (usually referred to as “outside basis differences”) arising from yet undistributed profits

and changes in foreign exchange rates, it does not recognise a deferred tax liability. For temporary differences arising from investments in associates the Company recognises deferred tax liabilities. The rate used reflects the assumptions that these differences will be recovered from dividend distribution unless a management resolution for the divestment of the investment exists at the closing date. For joint ventures, the Company assesses its ability to control the distribution of dividends based on existing shareholder agreements and recognises deferred tax liabilities accordingly. As of 31 December 2020, the aggregate amount of temporary differences associated with investments in subsidiaries, branches and associates and interests in joint arrangements, for which deferred tax liabilities have not been recognised, amounts to €123 million.

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Airbus / Financial Statements 2020