Universal Registration Document 2021

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 285 subsidiaries in 2021, including Enedis, EDF International, EDF Renewables and Dalkia.

15.2 Income tax payable

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 expense of €1,410 million for 2021 (after an income tax receivable of €406 million for 2020).

This expense breaks down as follows:

• tax charge of €741 million on the taxable profit for 2021, including a €325 million tax charge caused by extension to 50 years of the depreciation period of the 1,300MW-series PWR nuclear plants in France (see note 2.1.1);
• tax charge of €867 million on the exceptional result, which includes €459 million relating to the tax litigation described in note 14;
• tax receivable of €198 million corresponding to adjustments resulting from the tax consolidation.

15.3 Deferred taxes

Deferred taxes are not recognised in EDF’s parent company 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:

• 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, 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:

(1) Mainly concerning post-employment benefits for personnel, and unrealised tax savings resulting from the future deductibility of expenses whose deductibility is provisionally being challenged in ongoing tax litigations.

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