On an ongoing basis, Endesa maintains its commitments to good governance, transparency and integrity that, together with the creation of value for shareholders, form part of its standards in the management of its businesses and corporate activities.
In this context, compliance with the tax legislation in force at each moment forms part of the principles which inspire its corporate responsibility, with taxes paid being one of its contributions to the economic and social development of the society in which it operates. As an example of this, compliance with the tax laws has been incorporated into the values of the company .
Endesa's Fiscal Strategy is governed by the following guidelines:
- Compliance with tax legislation in force, adopting in every moment a reasonable interpretation of same and trying to avoid, deriving from such interpretation, inefficiencies and improper tax costs for Endesa.
- Renouncement of the following actions: operations or structures which only pursue a tax advantage, structuring of operations of an artificial nature or those not related with the own activity of the Company or the utilisation of non-transparent structures with the purpose of reducing its tax burden, realisation of investments in or through territories classified as tax havens with the sole purpose of reducing the tax burden.
- Consideration of the principles of the BEPS Project (Action Plan on Base Erosion and Profit Shifting) of the OECD in the fight against base profit erosion and profit shifting in both Endesa and its controlled subsidiaries in each one of the jurisdictions in which it operates.
- Full collaboration with the Tax Authorities in their activities of verification related to both Endesa and to third parties.
- Transparency towards third parties (shareholders, clients, suppliers, employees, regulatory bodies, etc.) regarding the herein described tax principles, the bodies implied in the tax governance of Endesa and the detail of its tax contribution in the countries in which Endesa operates.
- The promotion of cooperative relationships with the Tax Administration.
The Tax Strategy was approved by Endesa´s Board of Directors on 15th June 2015 and was updated on 19th June 2017. It will be subsequently updated when so required.
Tax Risk Management and Control System
The Audit and Compliance Committee (CAC) has been entrusted with the function of supervision of the functioning and efficacy of the system of management and control of the risks of the Group, tax risks included. In accordance with the stipulations of the CAC Regulations, it will directly supervise the Risk Committee which is the internal body responsible for ensuring the correct functioning of the control systems and risk management of the company, ensuring the participation of Top Management in the strategic decisions of control and risk management and fostering a culture in which risk is a factor to take into account in the decisions and at all levels in the entity.
Regarding the Risk Committee, it is configured as the body of tax compliance, in charge of the functions of supervision and efficacy of the Group Tax Risk Management and Control System, reporting in respect of this to the CAC, in accordance with the stipulations of the Regulation UNE 19602.
The Risk Committee undertakes all the risks of Iberia, specifically including the tax risks, and excluding those already included in the Model of Prevention of Penal Risks and those related to the System of Internal Control of Financial Information (SCIIF), which are reported to the CAC by other channels (Supervision Committee and Transparency Committee).
The Tax Risk Management and Control Model comprises of five elements, which together guarantee an adequate control system for the prevention of risks:
- Control Framework: the set of rules, processes and structures that form the basis for the development of the internal control of the organization.
- Evaluation of risks and control activities: carried out jointly by the Supervisory Committee and those responsible for the processes. Each criminal risk scenario identified relies on, at least, one control activity whose objective is to avoid that the risk materializes and to prevent that the crimes analysed arise.
- Supervisory Activities: continual monitoring in order to ensure the design and functioning thereof comply at all times with the provisions of the applicable law, analysing and resolving the incidents identified.
- Information and Communication: promotion of the necessary initiatives to ensure proper dissemination and training of staff on ethics and criminal risk prevention, thus ensuring that all members of the organization are able to properly fulfil their obligations in this regard. All the collaborators of Endesa have the obligation to communicate any violation or suspected violation of the ethics rules and the prevention of crimes through the ethics channel.
- Disciplinary System: violation of the measures contemplated in the Model and of the Company´s rules of conduct are sanctioned via the application of Endesa´s penalty regime established in the Company´s Collective Agreement.
Endesa´s Tax Risk Management and Control Policy shall serve as the basis for Endesa´s Tax Control Framework.
It intends to regulate the principles that should guide Endesa´s Tax Function with the object of carrying out a correct management and control of the tax risks, comprising of:
- Principles guiding the management of tax risks, establishing obligations and duties within the organization in such regard and including a description of the suggested measures for mitigating any potential identified tax risks.
- Principles guiding the proper control of tax risks, including, on the one hand, the implementation of several preventive ex ante controls and, on the other hand, ex post controls aimed at identifying, measuring, analysing, monitoring and reporting risks in accordance with the provisions of Endesa's Risk Management and Control Policy and of its Operating Instructions for developing the Endesa Risk Map.
Due diligence is a relevant factor for Endesa in the carrying on of its business, not only in relation to the control of the selection of the members of the organisation (internal due diligence) but also in relation to the third parties with which it interacts (external due diligence).
Endesa has been awarded AENOR certification for its Tax Management Compliance System under the UNE 19602 Standard. This new certification recognises:
- The existence of a tax control system to identify, prevent and detect tax risks in order to avoid additional tax demands, fines from and even criminal liability vis-à-vis the Tax Authority.
- The existence of control and mitigation procedures for use in the event of a tax risk.
- This certification is further proof before the tax authorities and the courts that our organisation is determined to comply with all its tax obligations.
- The certification is also compatible with Endesa's tax responsibility policy and with its financial transparency and ethical compliance policy as regards its relationship with state, regional and local government agencies.