Groupe Renault - 2020 Universal Registration Document

04

RENAULT SA ANNUAL FINANCIAL STATEMENTS FINANCIAL STATEMENTS

Income tax 4.4.2.7 As Renault SA elected to determine French income taxes under the domestic tax consolidation regime when it was formed, this regime has applied to the Group in which Renault SA is taxed in France since January 1, 2004. French subsidiaries that are more than 95% owned by Renault SA pay their income taxes directly to the Company under this regime. Each entity included in the domestic tax consolidation records its theoretical taxes as if it was taxed separately. The tax saving generated by this system is treated as income for Renault SA, the Company heading the group of entities concerned. The Renault tax group, applying the principle of neutrality, Renault SA is not obliged to reallocate or reimburse the subsidiaries for the tax savings resulting from utilization of their tax losses. The maximum allowable amount of losses carried forward against taxable income is €1 million plus 50% of the taxable income above that amount. The balance can be carried forward indefinitely. These rules are applicable: for determining the income/loss of the tax consolidation group; P by convention, for determining the income/loss of each company P included in the tax consolidation serving as a base for their calculation of income tax. These rules on tax loss carryforwards apply to all losses existing at the year-end, whatever their origin. In practice, Renault SA has not charged deficits for the determination of its 2020 taxable income, which amounted to -€2,597 million. In 2020, the tax consolation group waived the reduced rate on industrial royalties as permitted by Article 39 terdecies of the CGI. The income generated by the tax consolidation in 2020 was €103 million, corresponding to the income tax paid by the subsidiaries of Renault SA, including any tax adjustments, as if they were taxed separately.

In 2020, the €78 million of interest received and paid mainly comprised: €16 million on the EMTN 44 bond issued on March 5, 2014; P €15 million on the EMTN 53 bond issued on September 28, 2018; P €12.5 million on the EMTN 54 bond issued on June 24, 2019; P €7.5 million on the EMTN 49 bond issued on March 8, 2017; P €7.5 million on the EMTN 51 bond issued on November 21, 2017; P €7 million on the EMTN 52 bond issued on April 18, 2018; P €6 million on the EMTN 55 bond issued on October 4, 2019; P €2 million on the EMTN 57 bond issued on November 25, 2020; P €1 million on the Samurai 19 bond issued on July 6, 2017; P €1 million on the Samurai 20 bond issued on July 9, 2017; P €1 million on the Samurai 21 bond issued on July 3, 2018. P €6 million in accrued interest on the loan covered by a French State guarantee are included in the net accrued interest on borrowing from credit institutions. Other financial expenses consist mainly of a debt waiver with respect to the DRAC corresponding to the repayment by Renault SA of a loan taken out by the DRAC for €33 million. 4.4.2.6 In 2020, Renault SA’s net extraordinary items correspond to a loss of €406 million, mainly resulting from derecognition of the shares in DRAC (-€282 million), offset by reversal of the impairment on the shares booked in financial income, and the balancing payment of €122 million made to Dongfeng in connection with the share transfer. The operation generated a loss of €155 million, which was recognized in the financial statements at December 31, 2020. There were no extraordinary operations in 2019. Extraordinary items

Details of the tax charge related to the year are as follows:

Taxes

Net income

Pre-tax income

Theoretical

Netting Credit generated Tax credit Net tax due Theoretical

As booked

(€ million)

Current income subject to normal rate

167

55

(55)

112

167

Extraordinary items Tax consolidation Allocations/provisions

(406)

(87)

87

(319)

(406)

(103)

(103)

103

1 2

1 2

(1) (2)

Other TOTAL

(239)

(132)

32

(100)

(207)

(140)

Details of Renault SA’s deferred tax position are as follows:

2020

2019

Change

Liabilities (2)

Assets (1)

Liabilities (2)

Assets (1)

Liabilities (2)

Assets (1)

(€ million)

Expenses deducted (or taxed income) not yet recognized for accounting purposes

17 17

68 68

6 6

55 55

11 11

13 13

TOTAL

i.e. future tax credit. (1) i.e. future tax charge. (2)

428 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2020

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