EDF / 2018 Reference document

6.

FINANCIAL STATEMENTS Income statement

INCOME TAXES NOTE 15 TAX GROUP 15.1

15.3

TAX CREDIT FOR COMPETITIVITY

AND EMPLOYMENT (CICE)

Since 1 January 1988, EDF and certain subsidiaries have formed a group subject to the tax consolidation system existing under French tax legislation (Articles 223A to 223U of the French Tax Code). The tax consolidation group comprises 234 subsidiaries in 2018, including Enedis, EDF International, EDF Renewables and Dalkia. 15.2 Under Article 223A of the French Tax Code, EDF, as the head of the tax consolidated group, is the sole entity responsible for payment of income taxes and additional related contributions. The tax consolidation agreement between the members of the tax group stipulates that the arrangement must be neutral in effect. In application of this principle, each subsidiary pays the consolidating company a contribution to group income tax equivalent to the tax it would have paid had it been taxed separately. The tax consolidation agreement between EDF and the subsidiaries included in the tax group requires EDF to reimburse loss-making subsidiaries for the tax saving generated by their losses, as and when the entities concerned make taxable profits, in compliance with the standard rules for use of taxable losses. The Company at the head of the tax group, EDF, recorded an income tax receivable of €756 million for 2018. The breakdown is as follows: tax receivable of €955 million for the taxable loss of 2018; ■ tax receivable of €235 million on the exceptional result; ■ an expense of €36 million for adjustments resulting from the tax consolidation. ■ INCOME TAX PAYABLE

The amounts received in 2018 under the French CICE tax credit scheme for 2017 were to fund the Company’s investment and recruitment efforts.

DEFERRED TAXES 15.4 Deferred taxes are not recognised in EDF’s individual financial statements. Deferred taxes result from differences between the accounting bases and tax bases of items. They generally arise as a result of timing differences in the recognition of income and expenses: deferred tax assets reflect expenses which will be tax deductible in future years or ■ losses carried forward which will reduce taxable income in the future; deferred tax liabilities reflect either advance tax deduction of future accounting ■ expenses or accounting revenues that will be taxable in future years and will increase taxable income in the future.

Changes in deferred taxes are as follows:

31/12/2018

31/12/2017

Variation

(in millions of euros)

1. Timing differences generating a deferred tax asset Non-deductible provisions (1) ■ Financial instruments and unrealised exchange gains ■

(15,385) (1,067)

(13,925)

(1,460) (1,110)

43

Other ■

(404)

(312)

(92)

(16,856)

(14,194)

(2,662)

TOTAL DEFERRED TAX ASSETS SUBJECT TO THE STANDARD RATE 2. Timing differences generating a deferred tax liability Financial instruments and unrealised exchange losses ■

3,758 2,149 5,907

19

3,739

Other ■

1,926 1,945

223

3,962

TOTAL DEFERRED TAX LIABILITIES SUBJECT TO THE STANDARD RATE

Capital gains not yet taxed, net of capital losses ■

- - -

-

-

Provisions for losses taxable at 15% ■

(8) (8)

8 8

TOTAL DEFERRED TAX LIABILITIES SUBJECT TO REDUCED RATE

(10,949)

(12,257)

1,308 (239)

BASIS FOR DEFERRED TAXES

Net future tax asset at standard rate (2) Net future tax liability at reduced rate

3,099

3,338

-

1

(1)

Mainly concerning post-employment benefits for personnel. (1) Applying a corporate income tax rate of 25.82% to long-term timing differences. (2)

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EDF I Reference Document 2018