LOREAL_Registration_Document_2017

4 2017 Consolidated Financial Statements* NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Analysis of tax charge 6.2. The income tax charge may be analysed as follows:

2017

2016

2015

€ millions

Profit from continuing operations before tax and associates

4,727.0

4,297.1

4,477.2

Theoretical tax rate Expected tax charge

28.95% 28.91% 30.15%

1,368.3

1,242.5

1,349.9

Impact of permanent differences (1) Impact of tax rate differences (2) Change in unrecognised deferred taxes

0.5

131.7 -164.6

1.5

-305.9

-116.1

-21.2

9.3

12.0 -17.9

Other (3)

-140.4 901.3

-5.2

GROUP TAX CHARGE

1,213.7

1,229.4

In 2016, this amount included €130.5 million relating to impairment losses recognised against Clarisonic and Magic (note 4.1.). (1) Including in 2017, profits of €147 million relative to the impact on deferred tax balances of the decrease in the tax rate from 38.25% to 24.95% in the USA, and €35 million (2) and €45 million respectively in 2017 and 2016 relative to the impact on deferred tax balances of the decrease in the tax rate from 34.43% to 25.83% planned in France by 2022. Including tax credits, taxes on dividend distributions, tax reassessments and provisions for tax liabilities. (3) including, in 2017, €211.1 million related to the 3% tax on dividends paid, following the claim filed for the 2013 to 2017 financial years, net of charges paid in June 2017 s in respect of 2017 in the amount of €55.7 million. This account also includes a charge of €62 million relating to an exceptional and additional contribution of 30% in France; including, in 2016, a charge of €52 million relating to the 3% tax on dividends paid as well as income of €57 million relating to claims filed in order to recover the share of s costs and expenses levied on certain dividends paid to consolidated companies by companies based in the European Union; including, in 2015, a charge of €45 million relating to the 3% tax on dividends paid. s The expected tax charge reflects the sum of pre-tax profit for each country, multiplied by the normal taxation rate. The theoretical tax rate reflects the total expected tax charge as a percentage of pre-tax profit. The impact of any reduced tax rates existing in certain countries in addition to the normal tax rates is included on the line Impact of tax rate differences .

Deferred taxes in the balance sheet 6.3. The net change in deferred taxes (assets and liabilities) can be analysed as follows:

€ millions Balance of deferred tax assets at 31 December 2014 Balance of deferred tax liabilities at 31 December 2014 Income statement impact (including The Body Shop)

834.0 -855.2

-53.4 -47.1

Translation differences

Other effects (1)

-207.2 547.9 -876.8 -79.8 17.5 96.7 548.3 -842.9 197.2

Balance of deferred tax assets at 31 December 2015 Balance of deferred tax liabilities at 31 December 2015 Income statement impact (including The Body Shop)

Translation differences

Other effects (1)

Balance of deferred tax assets at 31 December 2016 Balance of deferred tax liabilities at 31 December 2016 Income statement impact (including The Body Shop)

Translation differences

12.7 18.0

Other effects (1)

BALANCE OF DEFERRED TAX ASSETS AT 31 DECEMBER 2017 BALANCE OF DEFERRED TAX LIABILITIES AT 31 DECEMBER 2017

530.3

-597.0 Including mainly the deferred tax impact of currency hedging instruments recognised in equity, as well as the tax effect on actuarial gains and losses recognised in equity. (1) 2017 and 2016 also take into account the impact of a decrease in the tax rate in France on the Group's stake in Sanofi for €16.6 million and €33 million, respectively, and, in 2017, the impact of the decrease in the rate on deferred taxes in the USA on currency hedges and an actuarial difference amounting to €26 million, as well as the impact of the sale of The Body Shop for €79 million.

REGISTRATION DOCUMENT / L'ORÉAL 2017

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