Group tax policy

A wide scope

The policy covers all the Group’s taxes: direct and indirect taxes, duties, contributions, any tax or customs deductions which are ultimately the responsibility of the Company or its customers (when EDF merely acts as a collector on behalf of third parties).

This policy must be applied throughout the Group, by all controlled entities regardless of their nature or geographical location, with the exception of regulated infrastructure managers, for whom it constitutes a guide. All Group staff must comply with this policy which aims to protect the Group’s reputation and to reduce any tax risks to which it may be exposed through its activities. The policy follows the following guidelines:

• strengthen the tax performance of the Group in strict compliance with national and international tax laws and regulations;
• control tax risks through continued, systematic improvement, in all Group entities, of the identification and management of fiscal risks;
• implement the tools, reporting and actions necessary for the continued, optimum, forward-looking management of tax cash flows⁽¹⁾, as well as attentive and proactive monitoring of the Group’s effective tax rate;
• ensure the conditions necessary for obtaining constructive relations with the tax and government authorities of all kinds by maintaining a transparent, professional relationship with them.
  

Ethical principles

In the context of the allocation between countries of operating margins internal to the Group, EDF strives to apply a transfer price policy in accordance with the principles of the OECD to justify the resulting revenues. EDF has no legal implantation (company, branch or office of representation) in a territory listed as a non-cooperative state or territory as defined by French and international legislation which is not determined by economic activity reasons and under no circumstances purely by tax reasons. Similarly, cash flow via these countries is prohibited where it is for tax reasons only.

Presence in Luxembourg and Ireland

Like all major French and international groups, EDF relies on captive and mutual insurance companies to supplement the cover provided by traditional insurance markets. Captive insurance companies and mutual insurance funds enable EDF to reduce the cost of its insurance schemes and the amount of premiums paid to the insurance market. EDF has three captive insurance companies, based in Ireland and Luxembourg:

• Wagram Insurance Company DAC. (wholly owned by EDF), an insurance company founded in 2003 in Dublin which is involved in the majority of the Group’s insurance schemes;
• Océane Ré (wholly owned by EDF), a reinsurance company founded in 2003 in Luxembourg to reinsure EDF’s nuclear civil liability risk;
• Tereco (wholly owned by Framatome), a reinsurance company within the Framatome consolidation scope located in Luxembourg, to reinsure a portfolio of risks including that of Framatome’s nuclear civil liability.
  
  

Taxes paid by the Group

In 2019, the EDF group’s tax expense⁽²⁾ was €3,798 million, a 2.9% increase (€108 million) compared to 2018 (up +3.3% in organic terms).

The EDF group contributes to the development of the French regions through an annual payment of more than €1.8 billion in local taxes to local authorities.

The income tax expense amounted to (€1,581) million in 2019, corresponding to an effective tax rate of 24.71%⁽³⁾ (compared to an expense of €(178) million in 2018, corresponding to an effective tax rate of 27.13%). The €1,759 million increase in the income tax expense between 2019 and 2018 was mainly due to the rise in pre-tax income of €5,743 million, generating an additional income tax expense of €1,977 million via the application of a corporate income tax rate of 34.43% in France.

Adjusted for the non-recurring items, the effective tax rate in 2019 was 19.1%, down from 22.6% in 2018.

Income taxes paid by the Group amounted to €922 million in 2019 (€309 million in 2018⁽⁴⁾): the €613 million increase in corporate tax paid was essentially due to the significant increase in taxable profits in France.

Income tax paid in all the countries where the Group has subsidiaries is detailed in an appendix, in section 3.6.7.

3.3.1.2.4 Sponsorship

For more than 30 years, EDF group and its Foundation have supported public interest actions. Their corporate sponsorship policy is based on the values of respect, solidarity and responsibility. Endowed with a budget of €10 million per year, the EDF group Foundation has worked with several Group subsidiaries represented on its Board of Directors to promote a Group approach to corporate sponsorship. Philanthropic actions are carried out either by the Foundation, or directly managed by EDF’s parent company and the Group’s subsidiaries.

To prepare for the coming term (the current one expired on 31 December 2019), the Foundation consulted all its stakeholders, both internally and externally, on possible areas of intervention and expected impact on civil society. Following this consultation, the EDF group Foundation’s Board of Directors decided to refocus its areas of intervention for the next 4 years (2020-2023) on the environment, education and inclusion.

Areas of intervention

Solidarity is the basis for the EDF group Foundation’s action which can be divided into the following categories:

• fight against precarious work, social integration of young people and education;
• access to culture, the Foundation runs a cultural space and offers a free programme of cultural mediation, exhibitions and meetings. In 2019, with the “Light matters” and “Coup de Foudre” exhibitions, it received more than 60,000 visitors;
• The social and fair economy, via the EDF Fonds Agir Pour l’Emploi (i.e. act for employment) foundation⁽⁵⁾, which helps to get the long-term unemployed back to work.
  
  

Given that scientific and technological progress ultimately contributes to human progress, the EDF group Foundation is committed to supporting access to scientific knowledge in order to develop promoting science and innovation amongst young people, medical research, digital progress, using the digital revolution as a lever for renewing social cohesion.

In 2019, the Foundation dedicated over €7.1 million overall to financing initiatives directly relating to solidarity and progress in France.

Means of action

Working with associations, the Foundation not only provides organisations with financial support to enable the implementation of public interest projects, but also loans out employees via skills sponsorship and volunteer work, and offers assistance, particularly IT support. For instance, for the Telethon, in addition to the funding provided by the Foundation for genetic disease research, hundreds of EDF group employees are taking action through various initiatives (donating their time, cultural events, sports challenges, etc.); and a contribution by the Foundation to the financing of a digital platform designed to collect all the financial donations in realtime. Similarly, EDF R&D research engineers offer their technological expertise to institutes that work for the public interest, through skills-based sponsorship. This is how a technology originally developed for nuclear power plant maintenance was re-tooled to improve accessibility to parts of Musée de Cluny previously not open to wheelchair users.

(1) Tax cash: tax actually paid or recovered.
(2) See note 11 Taxes and Duties in the notes to the Consolidated Financial Statements.
(3) See note 17.2 Reconciliation of the theoretical and effective tax expenses (tax proof) in the notes to the consolidated financial statements.
(4) This information was restated based on the IFRS 5 impacts of the discontinued E&P activity.
(5) FAPE: fape-edf.fr.