Red Electrica de España S A : Transparency, good governance and accountability

Transparency, good governance and accountability are the values that drive Red Eléctrica to comply with its tax obligations through its tax strategy. As part of its culture of compliance and its commitment to stakeholders, the Group publishes an annual Tax Transparency Report to publicly disclose its tax strategy, tax compliance and contribution, risk control and management and corporate income tax.

The tax responsibility of the Red Eléctrica Group is aligned with its 2030 Sustainability Commitment, which contemplates as a priority the development of the natural environment and the commitment to contribute to economic and social progress, generating mutual benefits for its stakeholders. Tax management and contribution through the payment of taxes ensures the economic sustainability of the Group acting under the principle of responsible taxation, creates shared value in the countries where it operates and also contributes to the fulfilment of the Sustainable Development Goals.

In this way, and according to Red Eléctrica's financial data for 2019, which shows stable growth in its revenue and net profit, during the past year it has contributed €732 million as a total tax contribution to society, of which 98% was paid in Spain, the country where its main revenue is generated (96%).

Furthermore, and in accordance with the value distributed (TTC), for every 100 euros of value generated by the Red Eléctrica Group in 2019, 44 euros was earmarked for the payment of taxes, and in the settlement of corporate income tax, Red Eléctrica selects and accepts the solidarity surcharge, thus allocating 0.7% of the total tax liability for social purposes.

Aware of the importance of the control and management of tax risks, Red Eléctrica maintains a proactive and responsible vision in its management within all the companies in the Group. The Company has specific controls thanks to comprehensive risk management and Internal Control Over Financial Reporting systems (ICFR).

Similarly, it undertakes a series of tax commitments and good practices by adhering to different codes and aligning itself with guidelines and principles of noteworthy recognition, such as the Spanish Tax Authority's (AEAT) Code of Good Tax Practices, the OECD Guidelines on tax matters, the Base Erosion and Profit Shifting (BEPS) principles or the adoption of the Global Reporting Initiative (GRI) standards on tax matters.

All this effort is reflected in the presence of the Group in the prestigious Dow Jones Sustainability Index (DJSI), and in its leadership position in the 2019 tax transparency and responsibility ranking, published by the Commitment and Transparency Foundation (Fundación Compromiso y Transparencia).