EURONEXT_Registration_Document_2017

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FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements

NOTE 15 INCOME TAX EXPENSE

2017

2016

In thousands of euros

Current tax expense

(71,127)

(59,968)

Deferred tax expense

2,241

(6,994)

TOTAL

(68,886)

(66,962)

The actual tax charge incurred on the Group’s profit before income tax differs from the theoretical amount that would arise using the weighted average tax rates applicable to profit before income tax of the consolidated entities as follows:

Reconciliation of Effective Tax Charge

2017

2016

In thousands of euros

Profit before income tax

311,075

263,975

Income tax calculated at domestic tax rates applicable to profits in the respective countries

(96,184)

(79,246)

Tax effects of: (De) recognition tax losses

(125)

(65)

Non-deductible expenses

(2,065)

(1,839)

Other tax exempt income (a)

12,676

1,931

Over provided in prior years (b)

22,096

15,456

Other (c)

(5,284)

(3,199)

TOTAL

(68,886)

(66,962)

(a) Other tax exempt income includes the partially exempt capital gain recognized on the LCH share swap transaction in December 2017. (b) In 2016 ‘over provided in prior years’ were positively impacted by the release of a €16.3 million tax provision recognised in 2013, as a result of the lapse of the statute of limitations. In 2017 ‘over provided in prior years’ were again positively impacted by the release of €20.4 million tax provisions recognised in 2013 and 2014, as a result of the lapse of statute of limitations. (c) As from2014,the Company applies the statutory tax rates without (temporary) surcharges (in Portugal and France) to the profit before income tax to calculate tax at domestic rates.The (temporary) surcharges have been included in the line ‘Other’. Within ‘Other’ a one off impairment on a tax receivable resulting from the carve out in 2014 was recognised.

The decrease in effective tax rate from 25.4% for the year ended 31 December 2016 to 22.1% for the year ended 31 December 2017 was primarily attributable to items that were included in the income tax expense for the years ended 31 December, 2017 and 2016, as discussed above. Due to the implementation of new US federal corporate income tax rate (21%) as per 1 January 2018, the recognised deferred taxes have been calculated at these new rates.

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2017 REGISTRATION DOCUMENT