HERMÈS - 2020 Universal registration document

5

CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Rationalisation of the income tax expense 10.2 The effective tax rate was 30.9% as at 31 December 2020, compared with 33.1% as at 31 December 2019. The difference between the theoretical income tax expense and the net actual income tax expense is explained as follows:

2020

2019

In millions of euros

Net income attributable to owners of the parent

1,385.4

1,528.2

Net income from associates

16.1 (4.1)

15.9 (7.0)

Net income attributable to non-controlling interests

Income tax expense Net income before tax

(613.0) 1,986.4 30.9% 32.0% (636.0)

(751.0) 2,270.3 33.1% 34.4% (781.7)

Effective tax rate

Current tax rate in France 1 Theoretical income tax expense

Reconciliation items: differences relating to foreign taxation (primarily the tax rate) s

56.1

128.9 (98.2)

permanent differences and other 2 s

(33.0)

TOTAL

(613.0)

(751.0)

The tax rate applicable in France is the basic rate of 31.00% increased by the social contribution of 3.3%, i.e. a total of 32.02%. (1) This line includes permanent differences, the effect of reversals of unused/non-activated tax loss carry forwards, prior year adjustments, and potential risks and (2) uncertain tax positions.

The Group’s companies are regularly audited by the tax authorities of the countries in which they operate. Risks, and uncertain tax positions are subject to appropriate debts, for which the amounts are reviewed by Group Management, together with its legal advisors, in accordance with the criteria of IAS 12 and IFRIC 23.

Deferred taxes 10.3 The net change in deferred tax assets and liabilities breaks down as follows:

2020

2019

In millions of euros

Deferred tax assets at 1 January Deferred tax liabilities at 1 January Net deferred tax assets at 1 January Impact on the income statement

510.8

462.4

24.6

37.3

486.2

425.1

5.1

47.8

Scope impact

(1.1)

-

Impact of exchange rate movements

(15.5) (21.4) 453.3 475.2

5.5 7.8

Equity impact 1

Net deferred tax assets at the end of the period Balance of deferred tax assets at the end of the period Balance of deferred tax liabilities at the end of the period

486.2 510.8

21.9 24.6 The equity impact primarily involves the deferred tax change resulting from revaluations recorded in equity (investments and financial investments and hedging of (1) future cash flows) and from actuarial gains and losses on employee benefit obligations. These changes had no impact on net income for the financial year (see Note 23.4).

372 2020 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL