Hermès // 2021 Universal Registration Document

6

PARENT COMPANY FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

INCOME TAX

NOTE 5

Accounting principles

The Company has opted for the French tax regime for company groups. Under the terms of an agreement between the parent company and the subsidiaries included in the tax consolidation group, the French subsidiaries included in the tax consolidation scope recognise, in their financial statements, an income tax expense on the basis of their own tax results. Hermès International, the head of the tax consolidation group, recognises the difference between the sum of the taxes of

subsidiaries and the tax due on the overall income as a tax credit due to tax consolidation. The savings in corporate income tax and additional contributions resulting from the application of the group tax regime are in principle definitively acquired by Hermès International. The tax consolidation scope includes 61 companies.

Breakdown of income tax 5.1

2021

2020

In millions of euros

Net income before tax and employee profit-sharing

1,184

1,325

Employee profit-sharing Net income before tax

(6)

(4)

1,178

1,321

Income tax

(13) (41)

22

Tax (parent company only)

(30)

o/w tax on extraordinary income

1

1

o/w tax on other items

(42)

(31)

Tax arising from tax consolidation

28

52

NET INCOME

1,165

1,343

Hermès International’s income tax expense only includes applicable exemptions under the terms of the parent-subsidiary regime for income from investments in subsidiaries and affiliates. The tax credit resulting from the tax consolidation takes into account the effect of the consolidation regime mainly related to the loss-making results of certain subsidiaries.

Hermès International recognised an income tax expense of €13 million in 2021, compared with an income tax credit of €22 million in 2020. In addition, Hermès International is liable for payment of the tax of the fiscally consolidated group, which amounted to €347 million in 2021 compared with €199 million in 2020.

Increases or decreases in future tax liability 5.2 As at 31 December 2021, the future tax receivable was equal to €47 million, versus €26 million as at 31 December 2020. This mainly consists of temporarily non-deductible expenses, in particular retirement provisions.

420 2021 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL