CAPGEMINI_REGISTRATION_DOCUMENT_2017

FINANCIAL INFORMATION

4.2 Consolidated Financial Statements

Recognized deferred tax assets Deferred tax assets and movements therein break down as follows:

Provisions for pensions and other post- employment benefits

Temporary differences on amortizable goodwill

Other deductible temporary differences

Tax loss carry- forwards

Total deferred tax assets

Note

in{millions of euros

At January{1, 2016

944

40

296

132

1,412

Business combinations

-

-

-

2

2

Translation adjustments

20

9

(17) (15)

(1)

11 35

Deferred tax recognized in the Income Statement Deferred tax recorded in income and expense recognized in equity

10

(46)

120

(24)

(27)

- -

22

12 10

7 6

Other movements

1

(5)

At December{31, 2016

892

169

281

131

1,473

Business combinations

1

-

-

(3) (9)

(2)

4

Translation adjustments

(77) (63)

(10) (39)

(9)

(105)

Deferred tax recognized in the Income Statement Deferred tax recorded in income and expense recognized in equity Other movements including offset with deferred tax liabilities

10

-

38

(64)

18

-

(17)

-

1

(8)

(2)

(9)

(1)

(20)

AT DECEMBER{31, 2017

763

118

246

156

1,283

Recognized tax loss carry-forwards total €763{million at December{31, 2017 (€892{million at December{31, 2016) and primarily concern the United States in the amount of €554{million (US${664{million) and France in the amount of €181{million.

These measures include: the Base Erosion and Anti-abuse Tax (BEAT): this alternative tax X is applicable from{2018. The tax rate will be 5% in the{2018, 10% for the tax years{2019 through{2025 and 12.5% thereafter. The tax base is distinct from the corporate income tax base and includes certain payments to non-US{Group entities, normally deductible for tax purposes. The tax amount is compared with the standard income tax expense calculated at the standard rate, and the higher of the two{amounts is payable; the tax on Global Intangible Low-Taxed Income (GILTI): X earnings and profits of foreign subsidiaries in excess of a 10% return on the tangible assets of the subsidiaries are included in the taxable profits of US{companies. A 50% deduction is applied to the tax base and the tax rate is 21%. Foreign tax credits may be deducted after the offset of available tax losses carried forward. Based on current market interpretations, in the Group’s opinion, these two measures introduced by the recent US{tax reforms will not impact the calculation of the Group consolidated tax expense or the valuation of Group deferred tax assets in the United States as of December{31, 2017.

US{deferred tax assets and tax loss carry-forwards

At December{31, 2017, cumulative US{tax losses carried forward totaled €2,164{million (US$2,595{million) and are fully recognized following the change in the taxable profit outlook since the last remeasurement of US{deferred tax assets in{2015. Net deferred tax assets of €541{million (US$649{million) are therefore recognized in the Unites States, including tax loss carry-forwards of €554{million (US$664{million), after adjustment for losses offset during the year, the recognition of additional tax loss carry-forwards and the change in tax rates in the United States. In addition to the change in the US{federal tax rate and the Transition Tax on Foreign Earnings, the US{tax reforms introduced other measures applicable to the Group, for which further clarification is expected.

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REGISTRATION DOCUMENT 2017 — CAPGEMINI