LOREAL_Registration_Document_2017

5 2017 Parent Company Financial Statements * NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS

In 2015, the income tax gain recognised by L’Oréal includes the additional 3% tax on dividends (€45.3 million) and saving of €144.9 million resulting from tax consolidation. The application of tax legislation led to an increase of €45.6 million in net profit for 2017, chiefly reflecting the net charge to regulated provisions along with research and corporate sponsorship tax credits among others.

The CICE (C rédit d’Impôt Compétitivité Emploi ) tax credit is recognised as a deduction from personnel costs in an amount of €6.4 million versus €5.1 million in 2016 and €4.8 million in 2015. The CICE tax credit represents 7% of eligible salaries paid in 2017 ( versus 6% in 2015 and 2016) and was allocated to investments in premises.

Increases or reductions in future tax liabilities

NOTE 9

31.12.2017

31.12.2015

31.12.2016

Changes Liability

€ millions

Asset

Liability

Asset

Liability

Asset

Asset

Liability

Temporary differences Regulated provisions

-

25.6

31.6

10.0 93.2

9.0

30.6

Temporarily non-deductible charges

66.6

55.5

64.0

84.7

Charges deducted (or revenue taxed) for tax purposes but not yet recognised

1.7

2.8

2.8

8.4

8.4

Temporarily non-taxable revenue

-

-

Deductible items Tax losses, deferred items

-

-

Potentially taxable items Special reserve for long-term capital gains

182.7

182.7

182.7

These figures factor in the social contribution of 3.3% which is added to corporate income tax, both at normal and reduced rates, and the reduction in the tax rate in 2022 for intangible asset impairment.

Research costs NOTE 10

Expenses booked in Research activities in 2017 totalled €895.0 million compared with €858.1 million in 2016 and €825.7 million in 2015.

REGISTRATION DOCUMENT / L'ORÉAL 2017

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