EDF / 2019 Universal registration document

6. Financial statements Financial statements

Income taxes Note 15

15.1

Tax group

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 317 subsidiaries in 2019, including Enedis, EDF International, EDF Renouvelables and Dalkia.

The amounts received in 2019 under the French CICE tax credit scheme for 2018 (€43 million) were to fund the Company’s investment and recruitment efforts. As of 1 January 2019, the CICE is replaced by a reduction in long-term employer contributions specifically for low salaries, to increase the measure’s effectiveness for low-skill jobs.

15.2

Income tax payable

15.4

Deferred taxes

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 charge of €(605) million for 2019 (income tax receivable of €756 million for 2018). The breakdown is as follows: tax charge of €850 million on the 2019 taxable profit (before exceptional items); ■ tax charge of €197 million on the exceptional result; ■ income of €442 million corresponding to adjustments resulting from the tax ■ consolidation. 1. Timing differences generating a deferred tax asset Non-deductible provisions  (1) ■ Financial instruments and unrealised exchange gains ■ Total deferred tax assets subject to the standard rate 2. Timing differences generating a deferred tax liability Financial instruments and unrealised exchange losses ■ Other ■ (in millions of euros)

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. EDF SA, as head of the tax group, includes tax losses generated at group level in its deferred tax positions. Changes in the basis for deferred taxes are as follows:

31/12/2019

31/12/2018

Variation

(14,704) (2,624)

(15,385) (1,067)

681

(1,557)

(595)

(404)

(191)

(17,923)

(16,856)

(1,067)

2,256 2,547 4,803

3,758 2,149 5,907

(1,502)

Other ■

398

Total deferred tax liabilities subject to the standard rate

(1,104)

Capital gains not yet taxed ■

-

- - -

-

Provisions for losses taxable at 15% ■

(15) (15)

(15) (15)

Total deferred tax liabilities subject to reduced rate

BASIS FOR DEFERRED TAXES

(13,135)

(10,949)

(2,186)

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

3,369

3,099

270

2

-

2

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

423

EDF | Universal registration document 2019