BPCE - 2020 Universal Registration Document

FINANCIAL REPORT

IFRS CONSOLIDATED FINANCIAL STATEMENTS OF BPCE SA GROUP AS AT DECEMBER 31, 2020

RECONCILIATION BETWEEN THE TAX CHARGE IN THE FINANCIAL STATEMENTS AND THE THEORETICAL TAX CHARGE

Fiscal year 2020

Fiscal year 2019

Tax rate

Tax rate

in millions of euros

in millions of euros

Net income attributable to equity holders of the parent

176

631

Change in the value of goodwill

84

Non-controlling interests

136

698

Share in net income of associates

(159)

(231)

Income taxes

189 341 448 789

594

INCOME BEFORE TAX AND CHANGES IN THE VALUE OF GOODWILL

1,775

Effects of permanent differences (1)(2) Consolidated taxable income (A) Standard income tax rate in France (B)

619

2,394

32.02%

34.43%

Theoretical income tax expense (income) at the tax rate applicable in France (AxB) Impact of the change in unrecognized deferred tax assets and liabilities

(253)

(824)

(11)

(87)

Reduced rate of tax and tax-exempt activities

(1) (3) 80 (1)

4

Difference in tax rates on income taxed outside France Tax on prior periods, tax credits and other tax (3)

209

92

Other items (4)

7

INCOME TAX EXPENSE (INCOME) RECOGNIZED

(189)

(594)

EFFECTIVE TAX RATE (INCOME TAX EXPENSE DIVIDED BY TAXABLE INCOME) 24.81% They are, for the first time at December 31, 2020, presented at base and restated with for the consolidated fiscal result. As a result, the impact of the permanent differences is (1) now excluded from the difference between the effective tax rate and the theoretical tax rate. The 2019 data have been adjusted for comparability purposes. Permanent differences primarily consist of the impact of the contribution to the SRF (Single Resolution Fund), which is a non-deductible expense (see Note 4.7), and the impact of (2) the consolidation of the share of costs and expenses on dividends received. This removes the effect of permanent differences from the difference between effective and theoretical tax rates. Tax on prior periods, tax credits and other tax mainly includes tax credits and the impact of tax audits and the resolution of ongoing disputes. (3) Other items mainly include the impacts of the tax consolidations of BPCE and Natixis in the amount of €38 million, provisions for tax adjustments in the amount of -€18 million (4) and tax effects related to changes in tax rates related to the valuation of the Group's deferred tax assets and liabilities in the amount of -€24 million. 23.95%

5

11.2

DEFERRED TAX ASSETS AND LIABILITIES

Accounting principles Deferred tax assets and liabilities are recognized when temporary differences arise between the carrying amount of assets and liabilities on the balance sheet and their tax base, irrespective of when the tax is expected to be recovered or settled. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability settled based on tax rates and tax laws that have been enacted or substantivelyenacted by the balance sheet date. Deferred tax liabilities and assets are offset at the level of each tax entity. The tax entity may either be a single entity or a tax consolidationgroup. Deferred tax assets are recognized only to the extent that it is probablethat the entitywill be able to recover them in the foreseeable future.

Deferred tax assets and liabilities are recognized as tax income or expense in the income statement,except for those related to: revaluation differences on post-employment benefits; • unrealized gains and losses on financial assets at fair value • through other comprehensive income; and changes in the fair value of derivatives used as cash flow • hedges. for which the correspondingdeferred tax assets and liabilities are recognizedas unrealizedgains and losses directly in other comprehensive income. Deferred tax assets and liabilities are not discounted to their present value.

497

UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE