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General policies and principles regarding taxation
Good governance, transparency and integrity
Our commitment to corporate governance, integrity, and tax transparency is embedded in all our business management activities. We have obtained AENOR certification for compliance with the UNE 19602 standard in our tax compliance management system and have been awarded the ‘t for transparent’ seal by the Haz Foundation.
Our dedication to good governance, transparency, and integrity, along with the creation of value for shareholders and investors, forms part of our approach to business management and corporate activities.
Endesa complies with tax regulations as part of the principles that guide the company's corporate responsibility and implements responsible tax policies that promote transparent and cooperative relationships with tax administrations. It also establishes a tax risk control and management system and engages in good governance practices.
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COOPERATIVE RELATIONSHIPS |
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TAX RISK CONTROL AND MANAGEMENT SYSTEM |
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Endesa continuously upholds its commitments to good governance, transparency, and integrity. These aspects, along with value creation for shareholders and investors, are central to its business management and corporate activities.
In this context, compliance with applicable tax legislation at all times is a fundamental principle of its corporate responsibility. Taxes paid represent one of its contributions to the economic and social development of the societies in which it operates. This commitment is reflected in the company’s core values, which emphasise respect for regulations to protect and safeguard safety, health, the environment, and human rights.
Moreover, Endesa’s sustainability policy states that compliance with applicable tax legislation is one of the key drivers of sustainability. The company’s tax contributions are one of its primary pillars for the economic and social development of the communities in which it operates.
Tax strategy
Endesa’s Tax Strategy is guided by the following principles:
Compliance with applicable tax regulations, adopting reasonable interpretations and seeking to avoid inefficiencies and undue tax costs for Endesa.
Refraining from certain activities, such as engaging in transactions solely for tax advantages, structuring artificial operations unrelated to the company’s core business, using opaque structures just to reduce tax burdens, or making investments in or through tax havens solely to reduce tax liabilities.
Consideration of the OECD’s BEPS Action Plan principles to prevent base erosion and profit shifting, both for Endesa and its controlled subsidiaries in all jurisdictions of operation.
Full cooperation with tax authorities in audit processes.
Tax transparency towards third parties (shareholders, customers, suppliers, employees, regulators, etc.) concerning the present principles of action in tax matters, the bodies involved in Endesa's tax governance, and the details of its tax contributions in the countries where it operates.
Promotion of cooperative relationships with Tax Authorities.
Endesa’s Tax Strategy was approved by the Board of Directors on 15 June 2015 and updated on 19 June 2017. In 2024, a review concluded that no updates were necessary. This conclusion was documented in the Integrated Report on the activities of the Board Committees.
Tax Risk Control and Management System
The Audit and Compliance Committee (ACC) is responsible for supervising the functioning and effectiveness of the Group's risk control and management system, including tax risks. Under the ACC’s regulations, it directly supervises the risk committee, the internal body responsible for ensuring the effective operation of Endesa’s risk control and management systems. This committee ensures senior management participation in strategic risk control decisions and fosters a culture that considers risk at all decision-making levels.
The risk committee also acts as the tax compliance body, overseeing the tax risk control and management system and reporting to the ACC in accordance with UNE 19602.
The scope of the risk committee encompasses all risks, including specifically tax risks. However, it excludes those already covered by the Criminal Risk Prevention Model and those related to the Internal Control System for Financial and Non-Financial Information, which are reported to the ACC through other channels (Supervisory Committee and Transparency Committee).
The Tax Risk Control and Management model consists of five elements that combine to guarantee a suitable control system for risk prevention:
Control Environment: a set of regulations, processes, and structures forming the foundation of the company’s internal control.
Risk assessment and control activities: jointly conducted by the Risk Committee and process leaders. Each identified tax risk scenario has at least one control activity whose objective is to prevent the risk from materialising and to prevent the risks analysed from occurring.
Supervision activities: the model is continuously monitored to ensure the design and functioning thereof comply with the provisions of applicable law, analysing and resolving any incidents identified.
Information and Communication: the necessary initiatives are promoted for the suitable dissemination and training of personnel, enabling members of the company to comply suitably with the provisions of the regulations.
Disciplinary system: non-compliance with the measures provided in the model and with the company's rules of conduct is sanctioned by applying Endesa's sanctioning regime contained in the company's collective agreement.
The management and supervision of risks are coordinated through quarterly meetings of the Risk Coordination Working Group, which includes the Tax Affairs Department.
Endesa's Tax Risk Control and Management Policy serves as the basic document for Endesa's Tax Control Framework. It establishes the guiding principles for Endesa’s Tax Function, aimed at identifying, managing, and controlling tax risks by defining:
- The principles governing tax risk management, which outline the obligations and responsibilities within the organisation. These principles also include a description of measures to mitigate identified tax risks.
- The principles that should guide the correct control of tax risks, which include a series of ex-ante preventive and ex-post checks involving the identification, measurement, analysis, monitoring, and reporting thereof in line with the provisions of Endesa's Risk Management and Control Policy and the operating procedure of Endesa's Risk Map.
For Endesa, due diligence is a key factor in the development of its business. It encompasses both internal due diligence concerning the selection and management of personnel and external due diligence regarding third parties with whom the company interacts.
Since 2020, Endesa’s Tax Compliance Management System has been certified by AENOR under the UNE 19602 Standard. This certification accredits the following:
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 presence of control and mitigation mechanisms in the event that a possible fiscal risk is finally identified.
Additional proof of the organisation’s commitment to fulfilling its tax obligations with Tax Authorities And Courts. Furthermore, it aligns with Endesa’s Tax Responsibility Policy and its Tax Transparency and Ethical Compliance Policy, which governs its relations with Public Administrations at the national, regional, and local levels.
As a key component of the System, Endesa promotes a compliance culture through employee training. To this end, the company has launched an online course on the Tax Risk Management and Control System, covering its various aspects.
Endesa also has an Internal Whistleblower Protection System. This channel facilitates the reporting of unlawful conduct and guarantees appropriate protection for whistleblowers, in line with the provisions of Law 2/2023, of 20 February. Indeed, this system strengthens the organisation’s commitment to preventing acts contrary to the legal framework as part of its broader compliance commitment.
It has a ‘Whistleblower Protection Policy,’ which details its scope of application, general operating principles—particularly the protection of the whistleblower and affected persons—as well as the way in which reported facts are presented and processed. This process is detailed in a second document called the ‘Procedure for the Management of Reported Incidents.’
In addition, the Internal Whistleblower Protection System guarantees, among other aspects, the right to submit information anonymously, the prohibition of any form of retaliation, support measures, and the special protection of personal data. These measures further demonstrate Endesa's commitment to complying with the most advanced ethical and regulatory compliance principles applicable in the matter.
As part of the system, Endesa provides an Information Channel allowing all stakeholders to securely and anonymously report any irregular, unethical, or illegal conduct that may occur in the course of the company’s activities. This channel also serves as the appropriate mechanism for securely and anonymously reporting irregular or inappropriate conducts in relation to the Tax Compliance System.
In 2024, the ACC conducted quarterly oversight of the effectiveness of the risk management system, including tax risks, as documented in the integrated report on the activities of the Board of Directors' Committees.
According to the report by PwC, which assessed the performance of the internal risk control and management function at the end of 2021, Endesa is one of the listed companies and one of the companies in the Electricity Sector most closely aligned with applicable best practices. This evaluation complies with the provisions of the regulations of the Audit and Compliance Committee, which mandates periodic evaluations of the performance of the internal risk control and management function by an independent external party—selected by the Audit and Compliance Committee.
Endesa has been awarded the transparency seal in the category ‘t***.’ This certifies 100% compliance with the transparency indicators for corporate websites approved by the Haz Foundation, underscoring Endesa’s commitment to disseminating and publishing relevant information online.
Training and awareness-raising
Endesa’s compliance training programme is comprehensive, designed to ensure that all employees understand and apply compliance regulations and policies in their daily work.
Each year, specific training programmes are launched, tailored by subject and target audience, using courses with explanatory videos and interactive content to make compliance accessible to all employees.
The Company offers online courses on various compliance models: i) a course explaining Endesa’s Criminal And Anti-Bribery Risk Prevention Model, detailing the monitoring and control activities aimed at preventing offences under Endesa’s scope, as well as offences under the Spanish Penal Code that could result in corporate criminal liability; ii) a course on the tax compliance system; iii) a course on competition law; and iv) courses on personal Data Protection.
Additionally, Endesa organises periodic thematic sessions for various employee groups, focusing on topics such as anti-corruption.
As of 31 December 2024, a total of 7,637 employees had completed these training programmes, including 82% of managers and 90% of middle managers, who are considered to be particularly exposed groups. By 31 December 2023, 3,758 employees had completed the training, including 25% of managers and 30% of middle managers.
Evaluation of Public Tax Policies
Endesa advocates for tax systems in its areas of operation that rigorously respect constitutional principles, general legal frameworks, and applicable European Union principles and directives.
The Spanish Constitution stipulates that the tax system must be fair, based on the principles of generality, equality, and progressivity, and must never be confiscatory. These principles should prevail in any legislation enacted by national, regional, or local authorities, each within their respective competencies.
To avoid an excessive tax burden on specific sectors or taxpayers, public authorities must respect the principles of efficiency and economy in public spending. Any violation of these principles should not be offset by increasing the tax burden on other economic agents.
Endesa highlights the potential economic impacts of an excessive tax burden. Excessive taxation can slow economic growth, reduce the competitiveness of companies operating in an increasingly globalised environment, discourage investment, reduce employment, and ultimately lower GDP.
As such, Endesa actively participates in various fiscal associations and forums and directly engages in public consultations during the legislative process of new tax regulations. In parallel, Endesa resorts to theCourts when it believes that public authorities have failed to uphold these principles and norms. In recent years, this has led to the annulment of specific regulations.
Regarding the use of tax policies as instruments to promote specific activities—particularly in the energy sector—Endesa supports leveraging such policies to achieve the EU’s decarbonisation objectives and advance the energy transition. This way, the company contributes to the acceleration of the clean electrification of the economy and the adoption of more sustainable technologies.
The review of the EU Energy Taxation Directive is part of a broader package of policy reforms aimed at this goal. The main objectives of the revision are: i) to align energy product and electricity taxation with EU energy and climate policies, supporting the EU’s 2030 energy goals and the goal of climate neutrality by 2050; and ii) to preserve the EU single market by updating the scope and structure of tax rates and streamlining the use of optional exemptions and reductions.
Endesa has submitted observations during the public consultation phase of the directive’s review, highlighting that energy product taxation was not aligned with EU energy and climate policies. Specifically, not all energy vectors are subject to the same tax burden, while those critical to enabling the energy transition are disproportionately penalised.
Endesa advocates for the ‘polluter pays’ principle, incentivising clean energy over more polluting alternatives. The company also stresses the need for an energy tax structure based on energy content and environmental impact, which is currently lacking. Moreover, the funds raised through these taxes should be directed toward decarbonisation policies that promote the shift to electrification of demand.