EDF_REGISTRATION_DOCUMENT_2017

6.

FINANCIAL STATEMENTS Income Statement

INCOME TAXES NOTE 16

16.1

BREAKDOWN OF TAX EXPENSE

Details are as follows:

2017

2016

(in millions of euros) Current tax expense

42

(1,886)

Deferred taxes

(189) (147)

498

(1,388)

TOTAL

In 2017, €362 million of the current tax expense relates to EDF’s tax consolidated group in France, and €(320) million relates to other subsidiaries (€(1,458) million and €(428) million respectively in 2016). Following the announcement that the 3% contribution on dividend distributions is unconstitutional, the Group recorded a tax receivable of €255 million (see note 3.6).

In France, the first finance law for 2017 introduced two exceptional contributions in addition to income taxes, levied on 2017 taxable income only. These cumulative contributions respectively apply to large companies with sales revenues of over €1 billion and €3 billion. The EDF group is concerned by both, and this brings the income tax rate for 2017 to 44.43% (including the 3.3% social contribution). The increase in the income tax charge resulting from these contributions is approximately €69 million.

16.2

RECONCILIATION OF THE THEORETICAL AND EFFECTIVE TAX EXPENSE

(TAX PROOF)

2017

2016

(in millions of euros)

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

3,401

4,181

34.43% 34.43%

Theoretical tax expense Differences in tax rate (1) Permanent differences (2)

(1,171)

(1,440)

51

119

476 478

(163)

Taxes without basis (3)

286

Unrecognised deferred tax assets

20 (1)

(189)

Other

(1)

ACTUAL TAX EXPENSE EFFECTIVE TAX RATE

(147)

(1,388)

4.32% 33.20%

2016: ■ (1) the positive impacts of income tax cuts from 2020 in France (from 34.43% to 28.92%) and the United Kingdom (from 18% to 17%), amounting to €69 million and €68 million respectively; (2) the favourable impact of deduction of payments made to bearers of perpetual subordinated loans, amounting to €200 million.

The main factors explaining the difference between the theoretical tax rate and this effective rate are: 2017: ■ (1) the positive impacts of income tax cuts in Belgium (from 33.99% to 25% in 2020) and the United States (from 40% to 27%), amounting to €38 million and €46 million respectively; (2) the favourable impact of sales of investments (mainly the CTE/RTE operation (see note 3.4.1) and assets subject to a reduced tax rate, amounting to €389 million. (3) the favourable impact of the appeal concerning the 3% contribution on dividend distributions, amounting to €255 million (and non-taxable) and the favourable impact of deduction of payments made to bearers of perpetual subordinated loans, amounting to €195 million.

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EDF I Reference Document 2017