Since 1 January 1988, EDF and certain subsidiaries have formed a group subject to the tax consolidation system existing under French tax legislation (Articles 223A to 223U of the French Tax Code). The tax consolidation group comprises 317 subsidiaries in 2019, including Enedis, EDF International, EDF Renouvelables and Dalkia.
Under Article 223A of the French Tax Code, EDF, as the head of the tax consolidated group, is the sole entity responsible for payment of income taxes and additional related contributions.
The tax consolidation agreement between the members of the tax group stipulates that the arrangement must be neutral in effect. In application of this principle, each subsidiary pays the consolidating company a contribution to group income tax equivalent to the tax it would have paid had it been taxed separately.
The tax consolidation agreement between EDF and the subsidiaries included in the tax group requires EDF to reimburse loss-making subsidiaries for the tax saving generated by their losses, as and when the entities concerned make taxable profits, in compliance with the standard rules for use of taxable losses.
The Company at the head of the tax group, EDF, recorded an income tax charge of €(605) million for 2019 (income tax receivable of €756 million for 2018).
The breakdown is as follows:
The amounts received in 2019 under the French CICE tax credit scheme for 2018 (€43 million) were to fund the Company’s investment and recruitment efforts. As of 1 January 2019, the CICE is replaced by a reduction in long-term employer contributions specifically for low salaries, to increase the measure’s effectiveness for low-skill jobs.
Deferred taxes are not recognised in EDF’s individual financial statements. Deferred taxes result from differences between the accounting bases and tax bases of items. They generally arise as a result of timing differences in the recognition of income and expenses:
EDF SA, as head of the tax group, includes tax losses generated at group level in its deferred tax positions.
Changes in the basis for deferred taxes are as follows:
| (in millions of euros) | 31/12/2019 | 31/12/2018 | Variation |
|---|---|---|---|
1. Timing differences generating a deferred tax asset | |||
Non-deductible provisions (1) | Non-deductible provisions (1) 31/12/2019(14,704) | Non-deductible provisions (1) 31/12/2018(15,385) | Non-deductible provisions (1) Variation681 |
Financial instruments and unrealised exchange gains | Financial instruments and unrealised exchange gains 31/12/2019(2,624) | Financial instruments and unrealised exchange gains 31/12/2018(1,067) | Financial instruments and unrealised exchange gains Variation(1,557) |
Other | Other 31/12/2019(595) | Other 31/12/2018(404) | Other Variation(191) |
| Total deferred tax assets subject to the standard rate | Total deferred tax assets subject to the standard rate31/12/2019(17,923) | Total deferred tax assets subject to the standard rate31/12/2018(16,856) | Total deferred tax assets subject to the standard rateVariation(1,067) |
2. Timing differences generating a deferred tax liability | |||
Financial instruments and unrealised exchange losses | Financial instruments and unrealised exchange losses 31/12/20192,256 | Financial instruments and unrealised exchange losses 31/12/20183,758 | Financial instruments and unrealised exchange losses Variation(1,502) |
Other | Other 31/12/20192,547 | Other 31/12/20182,149 | Other Variation398 |
| Total deferred tax liabilities subject to the standard rate | Total deferred tax liabilities subject to the standard rate31/12/20194,803 | Total deferred tax liabilities subject to the standard rate31/12/20185,907 | Total deferred tax liabilities subject to the standard rateVariation(1,104) |
Capital gains not yet taxed | Capital gains not yet taxed 31/12/2019- | Capital gains not yet taxed 31/12/2018- | Capital gains not yet taxed Variation- |
Provisions for losses taxable at 15% | Provisions for losses taxable at 15% 31/12/2019(15) | Provisions for losses taxable at 15% 31/12/2018- | Provisions for losses taxable at 15% Variation(15) |
| Total deferred tax liabilities subject to reduced rate | Total deferred tax liabilities subject to reduced rate31/12/2019(15) | Total deferred tax liabilities subject to reduced rate31/12/2018- | Total deferred tax liabilities subject to reduced rateVariation(15) |
| BASIS FOR DEFERRED TAXES | BASIS FOR DEFERRED TAXES31/12/2019(13,135) | BASIS FOR DEFERRED TAXES31/12/2018(10,949) | BASIS FOR DEFERRED TAXESVariation(2,186) |
| Net future tax asset at standard rate (2) | Net future tax asset at standard rate (2)31/12/20193,369 | Net future tax asset at standard rate (2)31/12/20183,099 | Net future tax asset at standard rate (2)Variation270 |
| Net future tax liability at reduced rate | Net future tax liability at reduced rate 31/12/20192 | Net future tax liability at reduced rate 31/12/2018- | Net future tax liability at reduced rate Variation2 |
(1) Mainly concerning post-employment benefits for personnel.
(2) Applying a corporate income tax rate of 25.82% to long-term timing differences.
