Page 249 - 2012 Annual Report

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VIVENDI l 2012 l Annual Report
FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS – STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS –
STATUTORY FINANCIAL STATEMENTS 4
4
III - CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 6 Income taxes
Note 6. Income taxes
Vivendi benefits from the French Tax Group System and considers that it
benefited, until December 31, 2011 included, from the Consolidated Global
Profit Tax System, as authorized under Article 209 quinquies of the French
Tax Code:
✱ under the French Tax Group System, Vivendi is entitled to consolidate
its own tax profits and losses with the tax profits and losses of
subsidiaries that are at least 95% directly or indirectly owned by it,
and that are located in France: Universal Music in France, SFR (as of
January 1, 2011), and Canal+ Group (excluding Canal+ France and its
subsidiaries, in which Vivendi directly or indirectly owns at most 80%
of the outstanding shares);
✱ until December 31, 2011, the Consolidated Global Profit Tax System
entitled Vivendi to consolidate its own tax profits and losses with the
tax profits and losses of subsidiaries that are at least 50% directly
or indirectly owned by it, and that are located in France or abroad,
i.e., besides the French companies that are at least 95% directly or
indirectly owned by Vivendi: Activision Blizzard, Universal Music
Group, Maroc Telecom, GVT, Canal+ France and its subsidiaries, as
well as Société d’Edition de Canal Plus (SECP). As a reminder, as
of May 19, 2008, Vivendi applied to the French Ministry of Finance
for the renewal of its authorization to use the Consolidated Global
Profit Tax System and an authorization was granted by an order dated
March 13, 2009, for a three-year period beginning with the taxable
year 2009 and ending with the taxable year 2011; and
✱ the changes in French Tax Law in 2011 capped the deduction for tax
losses carried forward at 60% of taxable income and terminated the
Consolidated Global Profit Tax System as of September 6, 2011. Since
2012, the deduction for tax losses carried forward is capped at 50%
of taxable income and the deductibility of interest is limited to 85% of
financial charges, net.
The impact of the French Tax Group and Consolidated Global Profit Tax
Systems on the valuation of Vivendi’s tax attributes (tax losses and tax
credits carried forward) are as follows:
✱ as Vivendi considers that its entitlement to the Consolidated Global
Profit Tax System was effective until the end of the authorization
granted by the French Ministry of Finance, and thereby included fiscal
year ending December 31, 2011, it filed on November 30, 2012, and
asked for the refund of €366 million with respect to the tax saving
for the fiscal year ended December 31, 2011. However, as this fiscal
position may be challenged, Vivendi has accrued a €366 million
provision for the associated risk (please refer to Note 6.6, below);
✱ moreover, considering that the Consolidated Global Profit Tax
System tax credits can be carried forward upon the maturity of the
authorization on December 31, 2011, Vivendi will request a refund of
the taxes due, under the French Tax Group System for the year ended
December 31, 2012, excluding social contributions and exceptional
contributions, or €208 million. Similarly, this fiscal position may be
challenged and Vivendi has accrued a €208 million provision for the
associated risk (please refer to Note 6.6, below);
✱ considering the above, as of December 31, 2011, Vivendi recorded
tax attributes amounting to a potential tax saving for a total of
€2,013 million. On February 18, 2013, the date of the Management
Board meeting that approved the Financial Statements for the year
ended December 31, 2012, the 2012 tax results of the subsidiaries
within the scope of Vivendi SA’s French Tax Group System were
determined as an estimate, and as a result, the amount of tax
attributes at such date could not be determined with certainty;
✱ after the impact of the estimated 2012 tax results and before the
impact of the potential consequences of the ongoing tax audits (please
refer to Note 6.6 below) on the amount of tax attributes, Vivendi SA
should achieve tax saving from tax attributes of €1,567 million
(undiscounted value based on the current income tax rate of 36.10%);
and
✱ as of December 31, 2012, Vivendi SA valued its tax attributes under
the French Tax Group System based on one year’s forecast results,
taken from the following year’s budget. On this basis, Vivendi would
benefit from the French Tax Group System tax savings in an amount
of €324 million (undiscounted value based on the current income tax
rate of 36.10%).
6.1. FRENCH TAX GROUP AND CONSOLIDATED GLOBAL PROFIT TAX SYSTEMS