EDF / 2019 Universal registration document

6. Financial statements

Notes to the consolidated financial statements

Income taxes Note 17

17.1

Breakdown of tax expense

Details are as follows:

2019

2018*

(in millions of euros)

Current tax expense

(1,609)

(266)

Deferred taxes

28

444 178

TOTAL

(1,581)

Restated for the impacts of IFRS 5 concerning the discontinued E&P operations (see note 2.3). *

In 2019, €(1,519) million of the current tax expense relates to French companies, and €(90) million relates to other subsidiaries (€(168) million and €(98) million respectively in 2018).

17.2

Reconciliation of the theoretical and effective tax expense (tax proof)

2019

2018 (1)

(in millions of euros)

Income of consolidated companies before tax Income tax rate applicable to the parent company

6,399

656

34.43% (2,203)

34.43%

Theoretical tax expense Differences in tax rate  (2) Permanent differences  (3)

(226)

185 162 118 156

1

30

Taxes without basis  (4)

239 132

Unrecognised deferred tax assets

Other

1

2

ACTUAL TAX EXPENSE EFFECTIVE TAX RATE

(1,581) 24.71%

178

-27.13%

Restated for the impacts of IFRS 5 concerning the discontinued E&P operations (see note 2.3). (1)

2019: ■ (2) the favourable impact of differences in tax rates between the French rate ■ of 34.43%, the Italian rate of 24% and the British rate of 19%, amounting to €185 million, (3) the favourable impact of disposals of investments and assets subject to a ■ reduced tax rate, amounting to €160 million (principally Alpiq and NnG), (4) the impact of deduction of payments made to bearers of perpetual ■ subordinated bonds, amounting to €204 million; 2018: ■ (3) the favourable impact of sales of investments and assets subject to a ■ reduced tax rate, amounting to €199 million (principally Dunkerque LNG), (4) the impact of deduction of payments made to bearers of perpetual ■ subordinated bonds, amounting to €203 million.

The income tax expense amounts to €(1,581) million in 2019, corresponding to an effective tax rate of 24.71% (compared to an income tax receivable of €178 million in 2018, corresponding to an effective tax rate of -27.13%). The €1,759 million increase in the Group’s tax expense between 2018 and 2019 essentially reflects the €5,743 million increase in net income before tax (notably resulting from changes in unrealised gains and losses on EDF SA’s portfolio of financial assets), which generated an additional tax charge of €1,977 million in application of the French income tax rate of 34.43%. After elimination of these non-recurring items (mainly changes in unrealised gains and losses on EDF SA’s portfolio of financial assets, impairment and disposals), the effective current tax rate for 2019 is 19.1%, compared to 22.6% in 2018. The main factors explaining the difference between the theoretical tax rate and this effective rate are:

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EDF | Universal registration document 2019