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Annual Report -
2013
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Vivendi
4
Financial Report | Statutory Auditors’ Report on the Consolidated Financial Statements |
Consolidated
Financial Statements
| Statutory Auditors’ Report on the Financial Statements | Statutory Financial Statements
Note 6. Income taxes
Note 6.
Income taxes
Vivendi SA benefits from the French Tax Group System and considers
that it benefited, until December 31, 2011 inclusive, from the
Consolidated Global Profit Tax System, as authorized under Article 209
quinquies of the French Tax Code. Therefore, since January 1, 2012,
Vivendi only benefits from the French Tax Group System:
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% owned directly or
indirectly, and that are located in France: for 2013, this applied to
Universal Music in France, SFR, and Canal+ Group;
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%
owned directly or indirectly, and that are located in France or abroad,
i.e., besides the French companies that are at least 95% owned
directly or indirectly 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;
in addition, as a reminder, on July 6, 2011, Vivendi lodged an
appeal with the Ministry of Finance in relation to the renewal of
its authorization to use the Consolidated Global Profit Tax System
for a 3-year period, from January 1, 2012 to December 31, 2014; and
the changes in French Tax Law in 2011 terminated the Consolidated
Global Profit Tax System as of September 6, 2011 and capped the
deduction for tax losses carried forward at 60% of taxable income.
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 (75% as from January 1, 2014).
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 use the Consolidated
Global Profit Tax System was effective until the end of the
authorization granted by the French Ministry of Finance, including
fiscal year ending December 31, 2011, on November 30, 2012,
Vivendi filed for a refund of €366 million with respect to the tax
saving for the fiscal year ended December 31, 2011. However, this
fiscal position is being challenged and in its Financial Statements
for the year ended December 31, 2012, Vivendi accrued a €366 million
provision for the associated risk, unchanged as of December 31, 2013
(please refer to Note 6.6);
moreover, considering that the Consolidated Global Profit Tax
System permitted tax credits to be carried forward upon the
maturity of the authorization on December 31, 2011, Vivendi
requested 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, brought
to €220 million, when filing the tax return with respect to fiscal year
ended December 31, 2012. This fiscal position may be challenged
and in its Financial Statements for the year ended December 31,
2012, Vivendi accrued a €208 million provision for the associated
risk, brought to €220 million as of December 31, 2013 (please refer
to Note 6.6, below);
given the foregoing, as of December 31, 2012, Vivendi recorded
tax attributes representing potential tax savings in the aggregate
amount of €1,553 million (compared to €2,013 million as of
December 31, 2011). On February 19, 2014, the date of the
Management Board Meeting that approved the Financial
Statements for the year ended December 31, 2013, the 2013 tax
results of the subsidiaries within the scope of Vivendi SA’s French
Tax Group System were determined by estimating, and as a result,
the amount of tax attributes as of December 31, 2013 could not be
determined with certainty;
taking into account the impact of the estimated 2013 tax results
and before the impact of the consequences of the ongoing tax
audits (please refer to Note 6.6) on the amount of tax attributes,
Vivendi SA expects to achieve €1,527 million in tax savings from
tax attributes (undiscounted value based on the current income tax
rate of 38.00%); and
as of December 31, 2013, Vivendi SA valued its tax attributes under
the French Tax Group System on the basis of one year’s forecast
results, taken from the following year’s budget. On this basis,
Vivendi would achieve tax savings from the French Tax Group
System in an amount of €163 million (undiscounted value based on
the current income tax rate of 38.00%).
6.1.
French Tax Group and Consolidated Global Profit Tax Systems
