Universal Registration Document 2020

6. Financial statements

Note 15 Income taxes

15.1 Tax group

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 267 subsidiaries in 2020, including Enedis, EDF International, EDF Renewables andDalkia.

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 receivable of €406 million for 2020 (income tax receivable of €(605) million for 2019).

The breakdown is as follows:

  • tax receivable of €435 million on the 2020 taxable loss (before exceptional items);
  • tax charge of €(230) million on the exceptional result;
  • tax receivable of €201 million corresponding to adjustments resulting from the tax consolidation.
15.3 Deferred taxes

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:

  • deferred tax assets reflect expenses which will be tax deductible in future years or losses carried forward which will reduce taxable income in the future;
  • deferred tax liabilities reflect either advance tax deduction of future accounting expenses or accounting revenues that will be taxable in future years and will increase taxable income in the future.

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)

31/12/2020

31/12/2019

Variation

1. Timing differences generating a deferred tax asset

1. Timing differences generating a deferred tax asset

31/12/2020

 

1. Timing differences generating a deferred tax asset

31/12/2019

 

1. Timing differences generating a deferred tax asset

Variation

 

  • Non-deductible provisions(1)
  • Non-deductible provisions(1)

31/12/2020

(16,589)

  • Non-deductible provisions(1)

31/12/2019

(14 704)

  • Non-deductible provisions(1)

Variation

(1,885)

  • Financial instruments and unrealised exchange gains
  • Financial instruments and unrealised exchange gains

31/12/2020

(4,717)

  • Financial instruments and unrealised exchange gains

31/12/2019

(2,624)

  • Financial instruments and unrealised exchange gains

Variation

(2,093)

  • Other
  • Other

31/12/2020

(529)

  • Other

31/12/2019

(595)

  • Other

Variation

66

Total deferred tax assets subject to the standard rate

Total deferred tax assets subject to the standard rate

31/12/2020

(21,835)

Total deferred tax assets subject to the standard rate

31/12/2019

(17,923)

Total deferred tax assets subject to the standard rate

Variation

(3,912)

2. Timing differences generating a deferred tax liability

2. Timing differences generating a deferred tax liability

31/12/2020

 

2. Timing differences generating a deferred tax liability

31/12/2019

 

2. Timing differences generating a deferred tax liability

Variation

 

  • Financial instruments and unrealised exchange losses
  • Financial instruments and unrealised exchange losses

31/12/2020

2,224

  • Financial instruments and unrealised exchange losses

31/12/2019

2 256

  • Financial instruments and unrealised exchange losses

Variation

(32)

  • Other
  • Other

31/12/2020

2,678

  • Other

31/12/2019

2,547

  • Other

Variation

131

Total deferred tax liabilities subject to the standard rateTotal deferred tax liabilities subject to the standard rate

31/12/2020

4,902

Total deferred tax liabilities subject to the standard rate

31/12/2019

4,803

Total deferred tax liabilities subject to the standard rate

Variation

99

  • Capital gains not yet taxed
  • Capital gains not yet taxed

31/12/2020

-

  • Capital gains not yet taxed

31/12/2019

-

  • Capital gains not yet taxed

Variation

-

  • Provisions for losses taxable at 15%
  • Provisions for losses taxable at 15%

31/12/2020

(25)

  • Provisions for losses taxable at 15%

31/12/2019

(15)

  • Provisions for losses taxable at 15%

Variation

(10)

Total deferred tax assets subject to the reduced rateTotal deferred tax assets subject to the reduced rate

31/12/2020

(25)

Total deferred tax assets subject to the reduced rate

31/12/2019

(15)

Total deferred tax assets subject to the reduced rate

Variation

(10)

BASIS FOR DEFERRED TAXES

BASIS FOR DEFERRED TAXES

31/12/2020

(16,958)

BASIS FOR DEFERRED TAXES

31/12/2019

(13,135)

BASIS FOR DEFERRED TAXES

Variation

(3,823)

Net future tax asset at standard rate (2) 

 

Net future tax asset at standard rate (2) 

 

31/12/2020

4,510

Net future tax asset at standard rate (2) 

 

31/12/2019

3,369

Net future tax asset at standard rate (2) 

 

Variation

1,141

Net future tax asset at reduced rate

 

Net future tax asset at reduced rate

 

31/12/2020

4

Net future tax asset at reduced rate

 

31/12/2019

2

Net future tax asset at reduced rate

 

Variation

2

(1) Mainly concerning post-employment benefits for personnel. In 2020 these provisions also include unrealised tax savings resulting from the future deductibility of expenses whose deductibility is temporarily being questioned in ongoing tax litigations (see note 14).

(2) Applying a corporate income tax rate of 25.82% to long-term timing differences.