Sopra Steria - 2018 Registration document

2018 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

6.2. Reconciliation of theoretical and effective tax expense

2018

2017

(in millions of euros)

Net profit

128.7

175.1

Adjustment for:

-

-

p Net profit from associates

3.6

1.7

Tax expense

-82.0 207.2

-73.9 247.4

p

Profit before tax

Theoretical tax rate

34.43%

34.43%

Theoretical tax expense Permanent differences

-71.3

-85.2

-5.2 -0.6 21.2

-3.7

Change in uncapitalised loss carryforwards

0.2

Impact of tax credits Tax rate differences

21.0

7.6 0.8

8.4

Prior year tax adjustments

-1.4

CVAE (net of tax) Tax reassessment

-15.2 -15.1

-14.2

2.0

Tax on dividends paid

-

-1.5

Other tax

-4.1

0.4

Actual tax expense

-82.0

-73.9

Effective tax rate

39.60%

29.87%

The reconciliation between the theoretical tax charge and the effective tax expense is conducted using the statutory tax rate in France for the Group’s parent company. This statutory tax rate consists of the 33.33% corporate tax rate plus the 1.1% Contribution Sociale de Solidarité des Sociétés (C3S) social security tax. The Cotisation sur la Valeur Ajoutée des Entreprises (CVAE) – a tax on corporate value added, which is a component of the Contribution Économique Territoriale (CET) regional business tax in France – is recognised as part of the corporate income tax expense, as is the Imposta Regionale Attività Produttive (IRAP) regional production tax in Italy. The Group operates in many countries with differing tax laws and tax rates. Within each country, tax rates may also vary depending on the tax policies implemented by local governments and can lead to differences between the current and deferred tax rates, as is the case

mainly in France, the United Kingdom and Belgium. Local weighted average tax rates applicable to Group companies can therefore vary from year to year depending on the relative level of taxable profit. These movements are reflected in Tax rate differences . In 2018, Other tax essentially consisted of unrecovered withholdings. In 2017, this item mainly included the impact in France of the claim filed to obtain tax relief by way of the refund of the 3% tax on dividends paid in 2015, 2016 and 2017 for a total of €3.8 million; the impact of the exceptional surtax assessed on corporate income tax paid, approved in France for the 2017 financial year, which had a negative impact of €0.9 million; and unrecovered withholdings. Lastly, Tax reassessment reflects movements in provisions to cover tax risks in France, which had a negative impact on permanent differences and tax expense of €15.1 million.

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SOPRA STERIA REGISTRATION DOCUMENT 2018